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Full text of "[Records and briefs of the United States Circuit Court of Appeals for the Ninth Circuit]"

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I i 

No. 12165 

IN THE 

United States Court of Appeals 

FOR THE NINTH CIRCUIT 



SOUTH SIDE THEATRES, INC., and MARCO 
WOLFF, FANCHON SIMON, ROY N. WOLFF 
and RUBE WOLFF, Joint Venturers, Doing Busi- 
ness Under the Name of SOUTH SIDE AS- 
SOCIATES, 

Appellants, 

vs. 

UNITED WEST COAST THEATRES CORPORA- 
TION, TWENTIETH CENTURY FOX FILM 
CORPORATION, CHARLES P. SKOURAS, 
SPYROS P. SKOURAS, FOX WEST COAST 
AGENCY CORPORATION, FRANK MILLAN, 
Receiver, etc., LOEWS, INC., RKO-RADIO PIC- 
TURES, INC., COLUMBIA PICTURES CORP., 
WARNER BROS. PICTURES, INC., and PARA- 
MOUNT PICTURES, INC., 

Appellees. 



TRANSCRIPT OF RECORD 

Appeals from the United States District Court for the 

Southern District of California 

Central Division 

> MAH 

PAUL P, 0*BHI£N, 

■ ■ ' ii r I ii i i i nr ii mi i i : 

Parker & Company, Law Printers, Los Angeles. Phone MA. 6-9171. 



No. 12165 

IN THE 

United States Court of Appeals 



FOR THE NINTH CIRCUIT 



SOUTH SIDE THEATRES, INC., and MARCO 
WOLFF, FANCHON SIMON. ROY N. WOLFF 
and RUBE WOLFF, Joint Venturers, Doing Busi- 
ness Under the Name of SOUTH SIDE AS- 
SOCIATES, 

Appellants, 

vs. 

UNITED WEST COAST THEATRES CORPORA- 
TION, TWENTIETH CENTURY FOX FILM 
CORPORATION, CHARLES P. SKOURAS. 
SPYROS P. SKOURAS, FOX WEST COAST 
AGENCY CORPORATION, FRANK MILLAN, 
Receiver, etc., LOEWS, INC.. RKO-RADIO PIC- 
TURES, INC., COLUMBIA PICTURES CORP., 
WARNER BROS. PICTURES, INC., and PARA- 
MOUNT PICTURES, INC., 

Appellees. 



TRANSCRIPT OF RECORD 

Appeals from the United States District Court for the 

Southern District of California 

Central Division 



Parker & Company, Law Printers, Los Angeles. Phone MA. 6-9171. 



INDEX 

[Clerk's Note: When deemed likely to be of an important nature, 
errors or doubtful matters appearing in the original certified record are 
printed literally in italics; and likewise, cancelled matter appearing in the 
original certified record is printed ard cancelled herein accordingly. When 
possible an omission from the text indicated by printing in italics the 
two words between which the omisi i seems to occur.] 

Page 

Appeal : 

Notice of 92 

Points and Designations of Transcript on, (Court of 
Appeals) 130 

Certificate of Clerk 93 

Cbmplaint for Declaratory Relief 2 

Exhibit A. Agreement, Dated April 1, 1941, Be- 
tween United West Coast Theatres Corporation, 
Fox West Coast Agency Corporation and South 
Side Theatres, Inc 10 

Exhibit B. Notice to Terminate Venture Agree- 
ment, Dated June 9, 1947 12 

Exhibit C. Notice to Terminate Venture Agree- 
ment, Dated June 27, 1947 16 

Motion to Dismiss and to Summon United States of 
America as a Party, Notice of 49 

Names and Addresses of Attorneys 1 

Notice of Appeal 92 

Objections to Motion, of Receiver, Frank Millan 67 

Objections to Receiver's Final Report 82 

Order Allowing Temporary Receiver Interim Com- 
pensation 48 



Page 

Order Approving Receiver's Final Account, etc 90 

Order to Show Cause, Filed June 3, 1948 47 

Order to Show Cause and Appointment of Temporary 
Receiver 17 

Points and Designations of Transcript Under Rule 
19, Subdivision 6 (Court of Appeals) 130 

Receiver's Final Report 76 

Receiver's Report, Filed August 20, 1948 69 

Reply to Objections to Receiver's Final Report 86 

Reporter's Transcript of Proceedings, Dated July 7, 
1947 95 

Reporter's Transcript of Proceedings, Dated Septem- 
ber 10, 1947 99 

Reporter's Transcript of Proceedings, Dated January 
26, 1948 125 

Return on Order to Show Cause 20 

Exhibit 1. Copy of Petition, Filed July 20, 1938, 
in Civil Action No. 87-273 24 

Exhibit 2. Copy of Amended and Supplemental 
Complaint, Filed November 14, 1940, in Civil 
Action No. 87-273 31 

Exhibit 6. Copy of the Decree, Filed December 
31, 1946, in Civil Action No. 87-273 36 

Wage Agreement Approval 51 



NAMES AND ADDRESSES OF ATTORNEYS 

For Appellants: 

MACFARLANE, SCHAEFER & HAUN 
1150 Subway Terminal Building 
Los Angeles 13, Calif. 

For Appellees United West Coast et al. : 

NEWLIN, HOLLEY, SANDMEYER & 

COLEMAN 
601 West Fifth Street 
Los Angeles 13, Calif. 

For Appellee Loews, Inc. : 

LOEB & LOEB 
r 523 West Sixth Street 
Los Angeles 14, Calif. 

For Appellees RKO-Radio Pictures et al. : 

MITCHELL, SILBERBERG & KNUPP 
727 West Seventh Street 
Los Angeles 14, Calif. 

For Appellee Warner Bros. Pictures: 

FRESTON & FILES 
650 South Spring Street 
Los Angeles 14, Calif. 

For Appellee Paramount Pictures: 

O'MELVENY & MYERS 
433 South Spring Street 
Los Angeles 13, Calif. 

For Appellee Receiver, Frank Millan: 

O'CONNOR & O'CONNOR 
530 West Sixth Street 
Los Angeles 14, Calif. [1*] 

*Page number appearing at foot of Certified Transcript. 



2 South Side Theatres, Inc., et al. vs. 

In the District Court of the United States for the 

Southern District of California 

Central Division 

Civil Action No. 7282-BH 

UNITED WEST COAST THEATRES CORPORA- 
TION and FOX WEST COAST AGENCY COR- 
PORATION, 

Plaintiffs, 

vs. 

SOUTH SIDE THEATRES, INC and MARCO 
WOLFF, FANCHON SIMON, ROY N. WOLFF 
and RUBE WOLFF, Joint Venturers, Doing Busi- 
ness Under the Name of SOUTH SIDE AS- 
SOCIATES, 

Defendants. 

COMPLAINT FOR DECLARATORY RELIEF 

Plaintiffs above named complain of the above named 
defendants as follows : 

I. 

The matter in controversy exceeds, exclusive of inter- 
est and costs, the sum or value of three thousand dollars 
($3,000.00), and arises under the laws of the United 
States, to-wit: Section 1 of the Act of Congress of July 
2, 1890, 15 U. S. C. A. sec. 4, entitled "An act to protect 
trade and commerce against unlawful restraints and mon- 
opolies," commonly known as the Sherman Act. 

II. 

At all times herein mentioned, plaintiff, United West 
Coast Theatres Corporation, has been and is now a Cali- 
fornia [2] corporation with its principal place of busi- 
ness in the County of Los Angeles, State of California, 



United West Coast Theatres Corporation, et al. 3 

and plaintiff, Fox West Coast Agency Corporation, has 
been and now is a Delaware corporation doing business 
in the County of Los Angeles, State of California. 

III. 

At all times herein mentioned, defendant, South Side 
Theatres, Inc. has been and now is a California corpora- 
tion with its principal place of business in the County of 
Los Angeles, State of California, and defendant, South 
Side Associates has been and is a joint venture by and 
between Marco Wolff, Fanchon Simon, Roy N. Wolff and 
Rube Wolff, each of whom are residents of the County of 
Los Angeles, State of California. 

IV. 

Plaintiff, United West Coast Theatres Corporation, at 
all times mentioned herein has been and now is the lessee 
of the premises known as the Fifth Avenue Theatre Build- 
ing in which is located the "Fifth Avenue Theatre" at 
2541 West Manchester Boulevard, Inglewood, California. 

V. 

Defendant, South Side Theatres, Inc. at all times men- 
tioned herein has been and now is the owner of the 
premises known as the Alto Theatre Building in which is 
located the "Alto Theatre" at 8862 South Western Avenue, 
Los Angeles, California. 

VI. 

On or about April 1, 1941, plaintiffs entered into a 
written agreement with defendant, South Side Theatres, 
Inc., pursuant to which the Fifth Avenue and Alto theatres 
and the buildings in which said theatres respectively are 
located, were to be operated by plaintiffs and said defend- 
ant as a joint venture to be known and designated as the 
"Fifth Avenue and Alto Theatres Venture" for a term 



4 South Side Theatres, Inc., et al. vs. 

of ten (10) years beginning April 1, 1941 and ending 
March 31, 1951 and pursuant to which agreement, plain- 
tiff, United West [3] Coast Theatres Corporation, became 
entitled to fifty-one per cent (51%) of the proceeds of 
said joint venture and became liable for fifty-one per 
cent (51%) of the losses of said joint venture and the 
defendant, South Side Theatres, Inc., became entitled to 
forty-nine per cent (49%) of the profits of said joint 
venture and liable for forty-nine per cent (49%) of the 
losses of said joint venture. Said agreement, made on or 
about April 1, 1941, also provided for the employment of 
plaintiff, Fox West Coast Agency Corporation, to gen- 
erally supervise the business of the venture for which 
services Fox West Coast Agency Corporation was to re- 
ceive weekly compensation equal to five and one-fourth per 
cent (5 >4%) of the weekly gross receipts of the venture 
(exclusive of admission taxes or other like taxes on 
admissions). 

VII. 

On or about April 1, 1941 plaintiffs and defendant. 
South Side Theatres, Inc., entered into a written agree- 
ment providing for the termination of the "Fifth Avenue 
and Alto Theatres Venture" upon the happening of certain 
events. A true and correct copy of said agreement is at- 
tached hereto, made a part hereof, and marked Exhibit A. 
Among the events set forth in said agreement, the hap- 
pening of which would give any part to said agreement 
the right to terminate, was and is the entry of a Decree in 
an action brought by the United States of America against 
any party or parties to said agreement requiring and di- 
recting such party or parties to terminate or nullify said 
venture agreement or the effect of which would be to sub- 
ject any of the parties thereto to any penalty or damage 
on account thereof or anything done thereunder. For con- 



United West Coast Theatres Corporation, et al. 5 

venience the agreement pursuant to which the venture 
was created will hereinafter be referred to as "the venture 
agreement" and the agreement pursuant to which the 
venture may be terminated will hereinafter be referred 
to as "the termination agreement. " [4] 

VIII. 

On or about March 1, 1944, defendant, South Side 
Theatres, Inc. sold, transferred, conveyed and assigned 
to defendant, South Side Associates all of its right, title 
and interest in, to and under the venture agreement, re- 
serving, however, to said South Side Theatres, Inc. all of 
its then interest in the real property comprising the Alto 
Theatre Building. 

IX. 

On June 11, 1946 a Special Expediting Court convened 
under the authority of the Expediting Act of February 11, 
1903 (15 U. S. C. A. sec. 29), sitting as the United 
States District Court for the Southern District of New 
York in the matter of United States of America, plaintiff, 
against Paramount Pictures, Inc., et al., defendants, 
Equity Number 87-273, filed an Opinion in which the 
court indicated that certain agreements between owners 
of two or more threatres normally in competition were 
illegal and the court further stated that "Even if the par- 
ties to such combinations were not major film producers 
and distributors, but were wholly independent exhibitors, 
such agreements might often be regarded as beyond the 
reasonable limits of restraint allowance under the Sher- 
man Act. 1 ' On December 31, 1946 said court filed its 
Findings of Fact, including, among other findings, Num- 
ber 113, as follows: "Other forms of operating agree- 
ments are between major defendants and independent ex- 
hibitors rather than between major defendants. The ef- 



6 South Side Theatres, Inc., et al. vs. 

feet is to ally two or more theatres of different owner- 
ship into a coalition for the nullification of competition 
between them and for their more effective competition 
against theatres not members of the 'poor." On the same 
date, December 31, 1946, said court entered a Decree en- 
joining and restraining certain of the defendants in said 
action, including Twentieth Century-Fox Film Corpora- 
tion and National Theatres Corporation (sometimes er- 
roneously referred to in said Decree as "National Theatres, 
Inc.". [5] "From making or continuing to perform pool- 
ing agreements whereby given theatres of two or more 
exhibitors normally in competition are operated as a unit 
or whereby the business policies of such exhibitors are 
collectively determined by a joint committee or by one of 
the exhibitors or whereby profits of the 'pooled' theatres 
are divided among the owners according to prearranged 
percentages." The above quoted provisions of said De- 
cree became effective July 1, 1947. 

X. 

The plaintiffs herein are subsidiaries of Twentieth 
Century-Fox Film Corporation and National Theatres Cor- 
poration, two of the defendants so enjoined and restrained. 
Plaintiffs are informed and believe and, therefore, allege 
that said venture agreement is an agreement, the per- 
formance of which is enjoined and restrained by said 
Decree from and after June 30, 1947. Plaintiffs fear that 
if they continue, through said venture or otherwise, to 
operate said Alto Theatre after June 30, 1947, they will 
violate the terms of the Decree referred to earlier in this 
paragraph and will be in contempt of the court making 
said Decree and will be subjected to penalties therefor. 



United West Coast Theatres Corporation, et al. 7 

XL 

The venture agreement is a written contract in which 
plaintiffs are interested and with reference to which plain- 
tiffs desire a declaration with respect to the rights or lia- 
bilities of plaintiffs and defendants. 

XII. 

An actual controversy relating to the legal rights and 
liabilities of plaintiffs and defendants exists and arises out 
of the following facts: 

On or about June 10, 1947, plaintiffs served upon 
defendants a notice of their intention to terminate the 
venture agreement by reason of the happening of [6] 
certain of the events specified in the termination 
.agreement and the provisions of the Decree in the 
matter of United States vs. Paramount Pictures, Inc., 
et al. A true and correct copy of said notice is at- 
tached hereto, and made part hereof and marked Ex- 
hibit B. 

On or about June 30, 1947, plaintiffs served upon 
defendants a notice terminating said venture agree- 
ment, a true and correct copy of which is attached 
hereto, made part hereof and marked Exhibit C. 
Plaintiffs contend that by reason of the provisions 
of the termination agreement and by reason of the 
provisions of the Decree in United States vs. Para- 
mount Pictures, Inc., et al., plaintiffs are no longer 
obliged to and are no longer legally permitted to per- 
form the venture agreement and that performance of 
the venture agreement has been rendered impossible 
and terminated by operation of law. 

Defendants contend that regardless of said Decree 
plaintiffs are still bound by said venture agreement 
and required to perform the same in accordance with 
its terms. 



8 South Side Theatres, Inc., et at. vs. 

XIII. 

Defendant, South Side Theatres, Inc., is the owner 
of the Alto Theatre Building and the Alto Theatre lo- 
cated therein, referred to in paragraph V hereinabove and 
for some time last past said "Fifth Avenue and Alto 
Theatre Venture" has been operating said theatre. On 
June 30, 1947 plaintiffs tendered the possession of said 
theatre to defendants and requested them to operate the 
same. Defendants refuse to accept possession of said 
theatre and refuse to operate the same. Said theatre is 
now closed and will remain dark from and after June 30, 
1947. Said theatre operation has been very profitable, 
the average weekly profits therefrom having been ap- 
proximately five hundred dollars ($500.00). In the event 
[7] that said theatre premises be not operated and said 
theatre remain dark, not only will the anticipated profits 
from said operation have been lost but future profits will 
be impaired by reason of the adverse effect upon the com- 
munity which patronizes said theatre and irreparable dam- 
age to the operations of said theatre will result. The 
"Fifth Avenue and Alto Theatres Venture," 1609 West 
Washington Boulevard, Los Angeles, California (tele- 
phone Republic 4111), although having tendered posses- 
sion to South Side Theatres, Inc. and South Side Asso- 
ciates of the real and personal property comprising the 
Alto Theatre Building, including the Alto Theatre lo- 
cated therein, for which a receiver is herein requested, is 
now in actual possession of the same. The parties en- 
titled to possession of said real and personal property are 
South Side Theatres, Inc. and South Side Associates, 6838 



United West Coast Theatres Corporation, et al. 9 

Hollywood Boulevard, Hollywood, California (telephone 
Hempstead 3263). 

Wherefore, plaintiffs pray judgment as follows: 

1. That the venture agreement be declared to be ter- 
minated and is of no further force or effect. 

2. That it be decreed that plaintiffs are no longer 
bound to perform the venture agreement or any part 
thereof. 

3. That the court declare such other rights or duties 
as may be necessary or proper with relation to said agree- 
ment between plaintiffs and defendants. 

4. That a receiver be appointed upon the filing of 
this complaint and permanently thereafter to take charge 
of said Alto Theatre Building, including the Alto Theatre 
located therein, and to operate the theatre business con- 
ducted in said theatre. 

5. That an order to show cause be issued herein re- 
quiring the defendants to appear before this court upon a 
day fixed by said court, then and there to show cause 
why the appointment of a receiver herein should not be 
made permanent. [8] 

6. That the court give such further relief, equitable 
or otherwise, as the court deems proper and necessary 
in the premises. 

7. For plaintiffs costs herein incurred. 

LOEB AND LOEB 

By Benjamin F. Schwartz 

Attorneys for Plaintiffs [9] 
[Verified.] [10] 



10 South Side Theatres, Inc., et al. vs. 

EXHIBIT "A" 

The parties hereto, United West Coast Theatres Cor- 
poration, Fox West Coast Agency Corporation and South 
Side Theatres, Inc. are simultaneously herewith entering 
into an agreement relating to the joint operation of the 
Fifth Avenue and Alto Theatres in Inglewood and Los 
Angeles respectively. United West Coast Theatres Cor- 
poration and Fox West Coast Agency Corporation are 
subsidiaries of Fox West Coast Theatres Corporation 
and their activities are scrutinized by the Government of 
the United States. None of the parties hereto believe that 
the entering into of said agreement or the carrying out 
thereof, in accordance with its terms, would in any wise 
violate any law or regulation of the United States or 
any other governmental body but on the contrary they 
and each of them believe that said agreement and the 
carrying out thereof is perfectly lawful. Nevertheless, if 
said agreement or anything done thereunder shall at any 
time be objected to in writing by the Government of the 
United States, acting through the Attorney General of 
the United States or the Assistant Attorney General in 
charge of the enforcement of laws directed against 
monopolies, as in contravention of the laws of the United 
States against monopolies or any consent or other decree 
entered in an action brought by the United States, or if 
proceedings be brought by said Government or by the 
Government of the State of California pursuant to the 
"Cartwright Act" or similar legislation, to terminate or 
nullify said agreement or subject any of the parties here- 
to to any penalty or damage on account thereof or any- 



United West Coast Tlicatrcs Corporation, et al. 11 

thing clone thereunder, or if United West Coast Theatres 
Corporation or Fox West Coast Theatres Corporation, or 
an subsidiary thereof, be directed, in writing, by the Gov- 
ernment of the United States, acting through the Attor- 
ney General of the United States or the Assistant At- 
torney General in charge of the enforcement of laws 
directed against monopolies, to divest itself of its inter- 
est in said Fifth Avenue Theatre, or an action be brought 
by the Government of the United States in which divest- 
ment is asked for, then the parties hereto [11] agree 
that they will forthwith, at the election of any one of 
them, terminate said agreement. Upon such termination 
each of the parties hereto shall automatically be released 
from its obligations thereunder thereafter to accrue. 

Dated: April 1st, 1941. 

UNITED WEST COAST THEATRES 
CORPORATION 

By /s/ Charles A. Buckley 

Vice President 
By /s/ Albert W. Leeds 

Secretary 

FOX WEST COAST AGENCY CORPORATION 

By /s/ Charles A. Buckley 

Vice President 

By /s/ John B. Bertero 

Asst. Secretary 

SOUTH SIDE THEATRES, INC. 

By /s/ L. R. Lautterstein 

Vice President 
By /s/ R. B. Grunauer 

Treasurer [12] 



12 South Side Theatres, Inc., et al. vs. 

EXHIBIT a B" 
June 9, 1947 
South Side Theatres, Inc. 
6838 Hollywood Boulevard 
Hollywood 28, California 

Gentlemen : 

We enclose a notice dated June 10, 1947, notifying you 
and South Side Associates that we elect to terminate the 
venture arrangements covering the operations of the Fifth 
Avenue Theatre premises, Inglewood, California, and the 
Alto Theatre premises, Los Angeles, California. 

As you are aware, the Decree in United States vs. 
Paramount Pictures, Inc., et al.. Equity No. 87-273, in the 
District Court of the United States for the Southern Dis- 
trict of New York prohibits the performance after June 
30 next of certain pooling agreements. We suggest that 
for convenience in accounting the operating arrangements 
between the Fifth Avenue and Alto terminate at the close 
of business on June 24 next, but if you desire the ar- 
rangements to continue to June 30, 1947 or to terminate on 
a date earlier than June 30, 1947, please advise us and 
we shall accept whatever date you desire. If you do not 
advise us that you desire a termination date earlier than 
June 30, 1947, we shall consider that the termination shall 
be June 30, 1947. 

Very truly yours, 
UNITED WEST COAST THEATRES 
CORPORATION 

By JOHN B. BERTERO 

Vice President 
FOX WEST COAST AGENCY CORPORATION 
By JOHN B. BERTERO 

Vice President 
JBB:DH 
Enc. 
reg. mail/rr [13] 



United West Coast Theatres Corporation, et al. 13 

June 9, 1947 
South Side Associates 
6838 Hollywood Boulevard 
Hollywood 28, California 
Gentlemen : 

We enclose a notice dated June 10, 1947, notifying you 
and South Side Theatres, Inc. that we elect to terminate 
the venture arrangements covering the operations of the 
Fifth Avenue Theatre premises, Inglewood, California, 
and the Alto Theatre premises, Los Angeles, California. 

As you are aware, the Decree in United States vs. 
Paramount Pictures, Inc., et al., Equity No. 87-273, in 
the District Court of the United States for the Southern 
District of New York prohibits the performance after June 
30 next of certain pooling agreements. We suggest that for 
convenience in accounting the operating arrangements be- 
tween the Fifth Avenue and Alto terminate at the close of 
business on June 24 next, but if you desire the arrangements 
to continue to June 30, 1947 or to terminate on a date earlier 
than June 30, 1947, please advise us and we shall accept 
whatever date you desire. If you do not advise us that you 
desire a termination date earlier than June 30, 1947, we 
shall consider that the termination shall be June 30, 1947. 

Very truly yours, 
UNITED WEST COAST THEATRES 
CORPORATION 

By s/ John B. Bertero 

Vice President 
FOX WEST COAST AGENCY CORPORATION 
By s/ John B. Bertero 

Vice President 
JBB:DH 
Enc. 
reg. mail/rr [14] 



14 South Side Theatres, Inc., et al. vs. 

To: South Side Theatres, Inc., a corporation: and South 
Side Associates, a joint venture consisting of Marco 
Wolff, Fanchon Simon, Roy N. Wolff and Rube 
Wolff, doing business under the name of South 
Side Associates. 

Whereas, under date of April 1, 1941, South Side 
Theatres, Inc., Fox West Coast Agency Corporation and 
United West Coast Theatres Corporation, executed an 
Agreement providing for the operation of the Fifth Ave- 
nue Theatre premises and the Alto Theatre premises, as 
more particularly described in said Agreement, as a joint 
venture, which Agreement is hereinafter referred to as 
the ''Venture Agreement" ; and 

Whereas, by another Agreement, hereinafter referred 
to as the "Termination Agreement", also executed by 
South Side Theatres, Inc., Fox West Coast Agency Cor- 
poration and United West Coast Theatres Corporation 
and dated April 1, 1941 (a photostatic copy of which is 
hereto annexed as Exhibit "A') it was provided that said 
Venture Agreement might be terminated forthwith at the 
election of any of the parties upon the happening of cer- 
tain events described in said Termination Agreement; and 

Whereas, there has occurred one or more of the events, 
the occurrence of which, by the terms of said Termination 
Agreement, permits the termination of said Venture 
Agreement forthwith at the election of any of said parties ; 
and 

Whereas, the undersigned, United West Coast Theatres 
Corporation and Fox West Coast Agency Corporation, 



United West Coast Theatres Corporation, et al. 15 

elect to terminate said Venture Agreement pursuant to 
the provisions of said Termination Agreement; 

You Will Please Take Notice, that the undersigned [15] 
do, and each of them does, hereby elect to terminate 
forthwith said Venture Agreement. 

Dated this 10th day of June, 1947. 

UNITED WEST COAST THEATRES 
CORPORATION 

(Corporate Seal) By JOHN B. BERTERO 

Vice President 

By T. H. SWORD 

Secretary 

FOX WEST COAST AGENCY CORPORATION 

(Corporate Seal) By JOHN B. BERTERO 

Vice President 

By T. H. SWORD 

Secretary [16] 



16 South Side Theatres, Inc., et al. vs. 

EXHIBIT "C" 

June 27, 1947 

South Side Theatres, Inc. 
South Side Associates 
6838 Hollywood Boulevard 
Hollywood 28, California 

Gentlemen : 

Pursuant to the Decree in United States of America 
vs. Paramount Pictures, Inc., et al., Equity No. 87-273, 
in the District Court of the United States for the Southern 
District of New York, the undersigned, United West 
Coast Theatres Corporation, will terminate all its interest 
in the operations of the Alto Theatre, Los Angeles, Cali- 
fornia, at midnight, June 30, 1947, and effective at that 
time will fully comply in every particular with Paragraph 
2 of Section III of said Decree. 

Will you be good enough to have a representative at 
the Alto Theatre at midnight, June 30 next, to take com- 
plete possession of the theatre, to inventory the equipment 
and operating supplies and to do such other things as may 
be necessary at the theatre premises upon cessation of 
the joint operation of the Fifth Avenue Theatre, Ingle- 
wood, with the Alto Theatre, Los Angeles. 
Very truly yours, 
UNITED WEST COAST THEATRES 
CORPORATION 

By JOHN B. BERTERO 

Vice President 
Approved : 

FOX WEST COAST AGENCY CORPORATION 
By JOHN B. BERTERO 

Vice President 
JBB:DH 

reg./rr 

[Endorsed]: Filed Jul. 1, 1947. Edmund L. Smith, 
Clerk. [17J 



United West Coast Theatres Corporation, et al. 17 
[Title of District Court and Cause] 

ORDER TO SHOW CAUSE AND APPOINTMENT 
OF TEMPORARY RECEIVER 

Upon reading the verified complaint of plaintiffs in this 
action and it appearing to the satisfaction of the court 
therefrom that this is a proper case for the appointment 
of a receiver, 

It Is Hereby Ordered that Frank Millan be and he is 
hereby appointed temporary receiver to take charge of and 
operate the Alto Theatre Building and the Alto Theatre 
located therein at 8862 South Western Avenue, Los An- 
geles, California, referred to in the complaint herein, and 
said receiver shall before entering upon the discharge of 
his duties file a good and sufficient bond in the sum of 
$5000.00. Immediately after his qualification said receiver 
shall take possession of [18] said theatre building and 
said theatre and all of the property connected with and 
used in the operation thereof and shall operate the same 
as a motion picture theatre and collect all rent due from 
tenants of said real property and to that end he shall 
employ or continue the employment of all necessary agents 
and employees, shall obtain motion pictures for exhibition 
in said theatre and generally shall do all things necessary 
to continue the operation of said building and said theatre. 

It Is Further Ordered that a copy of this order be 
served upon defendants South Side Theatres, Inc. and 
South Side Associates and that they be and appear before 
this court in Court Room 6, United States Court House, 
Los Angeles, California, on July 7th, 1947, at 10 o'clock 
a. m., then and there to show cause why the appointment 
of said receiver shall not be made permanent and until the 
further order of this court. 

Dated: July 1st, 1947. 

BEN HARRISON 

Judge 

[Endorsed]: Filed Jul. 1, 1947. Edmund L. Smith, 
Clerk. [19] 



18 South Side Theatres, Inc., et al. vs. 

[Title of District Court and Cause] 

RETURN ON ORDER TO SHOW CAUSE 

As cause why the appointment of the receiver should 
not be made permanent, the defendants show — 

1. The jurisdiction of this action is exclusively in the 
District Court of the United States for the Southern Dis- 
trict of New York and the Supreme Court of the United 
States. The relief prayed for by the plaintiffs will require 
this court to enter a judgment to the effect that action 
taken by the plaintiffs is or is not in compliance with a 
judgment entered by the United States District Court for 
the Southern District of New York and now before the 
Supreme Court of the United States for affirmance, re- 
versal or modification. 

2. The complaint fails to state a claim upon which re- 
lief can be granted. [21] 

3. The complaint states an incomplete and misleading 
part of the judgment of the New York Court, and pre- 
cludes an intelligent construction and application thereof. 

4. The Fifth Avenue and Alto theatres are not nor- 
mally in competition, within the meaning of the judgment 
of the New York District Court. 

5. The plaintiffs in this case are not parties to the 
case in the New York District Court, and for that reason 
the judgment of that court does not apply to them and 
to the contract to which they are parties, and which the 
plaintiffs attempt to abrogate. 

6. Twentieth Century-Fox Film Corporation and Na- 
tional Theatres Corporation are not parties to the con- 
tract stated in the complaint, and for that reason the judg- 
ment of the New York District Court does not apply to 
that contract. 



United West Coast Theatres Corporation, et al. 19 

7. On July 20, 1938, the United States of America 
filed a petition in the District Court of the United States 
for the Southern District of New York, against 166 cor- 
porations and individuals engaged in the business of 
producing, distributing and exhibiting motion pictures 
throughout the United States, charging them with en- 
gaging in a conspiracy to restrain and monopolize inter- 
state trade and commerce in motion pictures. Three prin- 
cipal means of effecting the restraint and monopoly were 
charged to be in use by the defendants; i. e., (1) concerted 
refusal to supply pictures to independent exhibitors, like 
the defendants in this case, except upon terms concertedly 
established by the conspirators; (2) the acquisition of 
theatres; [22] and (3) divisions of territory among the 
conspirators for the exhibition of pictures. 

8. Independent exhibitors like the defendants in this 
case, are the conspicuous victims of the conspiracy stated 
in that case. The great burden of the complaint in that 
case is a recitation of the injuries and restraints imposed 
on them. 

9. The defendants in this case are among the many 
victims of the conspiracy, restraint and monopoly stated 
in the petition and complaint in the Government case. 
The Fifth Avenue Theatre, which is the subject of the 
contract stated in the complaint herein, was originated 
and built by the defendants in this case, and represented 
a business opportunity and enterprise in which they were 
entitled to engage under the law. It was taken from 
them by the plaintiffs in this case with the assistance of 
the conspirators named in the Government case, by the 
unlawful acts and economic violence stated in the petition 
and complaint in that case. 

10. During the period from August 1, 1939, to March 
20, 1940, the defendants in this case constructed the Fifth 



20 South Side Theatres, Inc., et al. vs. 

Avenue Theatre. The conspirators named in the Govern- 
ment case refused to furnish pictures for use at that 
theatre. Shortly after construction of the Fifth Avenue 
Theatre was begun the plaintiffs in this case and Twen- 
tieth Century-Fox Film Corporation, National Theatres 
Corporation, Charles P. Skouras, Spyros P. Skouras, and 
other persons unknown, acquired land and constructed a 
theatre near the Fifth Avenue Theatre, called the Acad- 
emy Theatre. The conspirators named [23] in the peti- 
tion and complaint in the Government case did not refuse 
to furnish pictures for use at the Academy Theatre. Dur- 
ing the period from March 20, 1940, to April 1, 1941, 
the Fifth Avenue Theatre was closed, unused and dark, be- 
cause of the refusal of the conspirators to furnish pictures. 

11. On or about February 1, 1941, the persons and 
corporations above named, demanded of the defendants in 
this case that they transfer and convey to them all of the 
title, ownership and interest in the real estate and per- 
sonal property of the Fifth Avenue Theatre, that they 
cease to independently engage in the motion picture ex- 
hition business at the Alto Theatre, and transfer to them 
the exclusive possession, use, operation, supervision, man- 
agement and control of the Alto Theatre and of the mo- 
tion picture business there conducted ; and represented that 
upon compliance with that demand, and not otherwise, 
they would procure pictures from the other conspirators 
for use at the Alto and Fifth Avenue theatres, on terms 
and conditions necessary and appropriate for the success- 
ful and profitable operation of the businesses at those 
theatres, and would deliver to the defendants forty-nine 
percent of the profits of the operation of the Alto and 
Fifth Avenue theatres. 



United West Coast Theatres Corporation, et al. 21 

12. Because of the conspiracy and the restraint afore- 
said, the defendants were suffering great and irreparable 
injury and damage in their business and property at the 
Alto and Fifth Avenue theatres. Because there was no 
other alternative, and for the purpose of reducing the 
injury and damage, [24] the defendants complied with 
the demands, and, on or about April 1, 1941, conveyed to 
the plaintiffs the real estate and personal property of the 
Fifth Avenue Theatre, and entered into a contract trans- 
fering to them the exclusive possession, use, operation, 
supervision, management and control of the Alto Theatre 
and of the business there conducted. 

13. Since on or about April 1, 1941, to the present 
time, the plaintiffs have had exclusive possession, use, 
operation, supervision, management and control of the 
Alto and Fifth Avenue theatres and of the motion pic- 
ture businesses there conducted, and they have controlled, 
regulated, and restrained the business of the Alto and 
Fifth Avenue theatres to prevent and restrain competi- 
tion by those theatres with the Academy Theatre. 

14. The plaintiffs have a complete and adequate rem- 
edy in the District Court of the United States for the 
Southern District of New York. 

Attached to and made a part of this return are the 
following documents: 

Exhibit 1 : A copy of the Petition filed July 20, 1938, 
by the United States of America in the District Court 
of the United States for the Southern District of New 
York, in the case of United States of America v. Para- 
mount Pictures, Inc., Twentieth Century-Fox Film Cor- 
poration, National Theatres Corporation, Spyros P. 
Skouras et al, Civil Action No. 87-273, charging them 



22 South Side Theatres, Inc., et al. vs. 

with violations of the Sherman Antitrust Act, by con- 
spiring to restrain interstate trade and commerce in 
the production, distribution and exhibition of motion 
pictures. [25] 

Exhibit 2: A copy of the Amended and Supplemental 
Complaint in the above described case, filed November 14, 
1940. 

Exhibit 3: A copy of the Answer of Twentieth Cen- 
tury-Fox Film Corporation in the above described case. 

Exhibit 4 : A copy of the Answer of National Theatres 
Corporation in the above described case. 

Exhibit 5 : A copy of the Findings of Fact and Con- 
clusions of Law in the above described case, filed Decem- 
ber 31, 1946. 

Exhibit 6: A copy of the Decree in the above de- 
scribed case, filed December 31, 1946. 

Exhibit 7: Copies of the Petitions for appeals filed 
by Twentieth Century-Fox Film Corporation, National 
Theatres Corporation and other defendants in the above 
described case; assignments of errors and prayers for 
reversal, and order allowing appeals. 

Exhibit 8 : Copies of the Paramount defendants' Sepa- 
rate Petitions for appeal, assignments of errors, and or- 
der allowing appeals. 

Exhibit 9: Copies of the Petition for appeal filed by 
the United States of America in the above described case; 
assignment of errors and prayer for reversal, and order 
allowing appeal. 



United West Coast Theatres Corporation, et at. 23 

Exhibit 10: A copy of an Order of the Supreme Court 
of the United States staying enforcement of certain pro- 
visions of the [26] decree in the above described case, 
dated April 7, 1947. 

Exhibit 11: A copy of an order of the Supreme Court 
of the United States staying the enforcement of certain 
provisions of the decree in the above described case, dated 
June 13, 1947. 

Exhibit 12: A copy of a Statement as to Jurisdiction 
filed by the United States of America in the Supreme 
Court of the United States, on May 8, 1947, in the case 
of United States of America v. Paramount Pictures, Inc., 
et al., No. 79, October Term 1946. 

MACFARLANE, SCHAEFER & HAUN 
HENRY SCHAEFER, JR. 
WILLIAM P. GAMBLE 
JAMES H. ARTHUR 

By Henry Schaefer, Jr. 

Attorneys for Defendants 

RUSSELL HARDY 
Of Counsel [27] 

[Verified.] 

Aug. 28-47 

Pleadings having been prepared by out of State coun- 
sel Provisions of Rule 4 waived. 

JACOB WEINBERGER 

Judge [28] 



24 South Side Theatres, Inc., et al. vs. 

EXHIBIT 1 
Petition filed July 20, 1938, by the United States of 
America in the District Court of the United States for 
the Southern District of New York, in the case of United 
States v. Paramount Pictures, Inc., et al. [29] 

Equity No. 87—273 

In the District Court of the United States 
for the Southern District of New York 



UNITED STATES OF AMERICA, Petitioner 

v. 
PARAMOUNT PICTURES, INC., et al., Defendants 



PETITION 



LAMAR HARDY, 
United States Attorney. 
HOMER CUMMINGS, 

Attorney General, 
THURMAN ARNOLD, 

Assistant Attorney General, 
WENDELL BERGE, 
JOHN J. ABT, 
PAUL WILLIAMS, 
J. STEPHEN DOYLE, JR., 
JOHN F. CLAGETT, 

Special Assistants to the Attorney General. 

Filed July 20, 1938 [30 J 



United West Coast Theatres Corporation, et at. 25 
INDEX 



Page 

Parties defendant 1-5 

Parent companies 1 

Paramount 2 

Loew's 2 

R-K-0 3 

Warner Bros 3 

Twentieth Century-Fox 4 

Columbia 4 

Universal 5 

United Artists 5 

I. Jurisdiction and Venue 5 

II. Description of Defendants 6-27 

Paramount 6 

Loew's 9 

R-K-0 11 

Warner Bros 15 

Twentieth Century-Fox 17 

Columbia 20 

Universal 23 

United Artists 25 

III. History of the Motion Picture Industry 27-44 

IV. Description of the Industry 44-78 

(A) Branches of the Industry 44 

(1) Production 45 

(2) Distribution 50 

(3) Exhibition 54 



26 South Side Theatres, Inc., et al. vs. 

Page 

(B) Competitive Conditions in the In- 
dustry 69 

(1) Exhibition in affiliated first- 
run metropolitan theatres 70 

( 2 ) Exhibition in affiliated circuits 72 

(3) Affiliated theatre market 
comfortably filled by product 
of defendants, to exclusion 

of independent producers 74 

(4) Loaning- of players 75 

(5) Marketing methods, oversell- 
ing and overbuying 75 

(6) Refusal to sell second or 
other subsequent runs 77 

(7) Buyers' and sellers' markets 

in motion picture industry 78 

(I) [31] 



II. 



V. Interstate Commerce 79-83 

VI. Offenses Charged 83-111 

(A) Monopoly of exhibition in first-run 
metropolitan theatres 84 

(B) Nationwide monopoly of exhibition 

by producer-exhibitor defendants.... 88 

(C) Monopoly of production 95 

(1) Contract directors 96 

(2) Contract players 97 



United West Coast Theatres Corporation, et al. 27 

Page 

(D) Trade practices imposed upon inde- 
pendent exhibitors 101-107 

(1) Block booking 101 

(2) Forcing of short subjects 102 

(3) Arbitrary designation of play 
dates 103 

(4) Protection 103 

(5) Overbuying 104 

(6) Arbitrary, unconscionable and 
discriminatory film rentals.... 104 

(7) Prohibition of double features 106 

(8) Score charges 107 

(9) Minimum admissions 107 

(E) Benefits, favors and advantages ex- 
tended by the defendants to each 
other 108-111 

(1) Sharing advertising costs.— 108 

(2) Optional contracts 108 

(3) Contract modifications 109 

(4) Overage and Underage 110 

(5) Cancellation of short subjects 110 

(6) Move-overs Ill 

VII. Conclusion 111-114 

VIII. Prayer 115-118 

[321 



28 South Side Theatres, Inc., et al. vs. 

In the District Court of the United States 
for the Southern District of New York 



In Equity No. 87—273 

UNITED STATES OF AMERICA, Petitioner 

v. 
PARAMOUNT PICTURES, INC, et al., Defendants 



PETITION 

To the Honorable, the Judges of the District Court of 
the United States for the Southern District of New 
York, Sitting in Equity. 

The United States of America, by Lamar Hardy, 
United States Attorney for the Southern District of 
New York, acting under the direction of the Attorney 
General, brings this proceeding in equity against: 

Paramount Pictures, Inc.; Loew's, Incorporated; 
Irving Trust Company, New York, New York, Trustee 
in Bankruptcy for Radio-Keith-Orpheum Corporation; 
Warner Bros. Pictures, Inc. ; Twentieth Century-Fox 
Film Corporation; Columbia Pictures Corporation; Uni- 
versal Corporation; and United Artists Corporation — 
hereinafter referred to as the parent companies; and 
the L33] 



United West Coast Theatres Corporation, et al. 29 

89 

or preferred-run exhibition of motion pictures through- 
out the United States wherever any theatres affiliated 
with the producer-exhibitor defendants, or any one or 
more of them, operate or exist. 

(187) As pointed out in paragraph 50, supra, the pro- 
ducer-exhibitor defendants, in acquiring circuits of af- 
filiated theatres, have not gone into the same competitive 
areas to any appreciable extent, and then only in certain 
densely populated metropolitan areas where patronage is 
sufficient for all producer-exhibitor defendants operating 
in such areas. On the contrary, generally speaking, each 

r producer-exhibitor defendant has gone into a territory, or 
territories, for the acquisition of theatres by it, not oc- 
cupied by any of the other producer-exhibitor defendants. 
A statement of the affiliated theatre holdings of each of 
the producer-exhibitor defendants throughout the United 
States, together with the location of the theatres of each, 
by States, appears in paragraphs 122 to 126, inclusive, 
supra. 

(188) In the acquisition of theatres, each of the defend- 
ant producer-exhibitors has acquired one or more 
theatres through purchase, lease, or operating agreement 
from independent exhibitors. By reason of the power 
and position in the industry enjoyed by the said pro- 
ducer-exhibitor defendants, and each of them, and, as a 
result of their assurance of product for exhibition in 
those theatres, independent exhibitors, in some instances, 
have been compelled to sell or dispose of their theatres 
to the producer-exhibitor defendants, or some of them, 
as a result of coercive methods employed by the said [121] 



30 South Side Theatres, Inc., et al. vs. 

90 
producer-exhibitor defendants, or some of them. The said 
coercive methods so employed are sometimes referred to 
in the industry, particularly by independent exhibitors, as 
"distress methods/' The said methods have included the 
following: threats of building a theatre, or theatres, in 
opposition to the independent exhibitor if he does not 
agree to sell; threats to deprive the independent exhibitor 
of product, or desirable product, if he does not agree to 
sell; the purchase of theatre sites in the neighborhood of 
the independent exhibitor, with the suggestion conveyed 
to the independent exhibitor, either directly or through 
third parties, that the major producer-exhibitor in question 
intends to build and open a theatre on the new site if the 
independent exhibitor will not agree to sell; threats to 
purchase an equity or interest in the independent theatre 
for the purpose of gaining control through reorganization 
or otherwise and the imposition upon the independent ex- 
hibitor of arbitrary and unreasonable clearance and zon- 
ing schedules. The occasions and circumstances wherein 
and whereunder some or all of these methods have been 
used by the producer-exhibitor defendants, or some of 
them, are too numerous to mention herein, but have oc- 
curred in all sections of the United States. 

(189) The acquisition of affiliated theatres in different 
sections and areas of the United States by the producer- 
exhibitor defendants has resulted in a division of terri- 
tory between them, so that, in effect, each producer-ex- 
hibitor defendant, acting [122] 

********* 



United West Coast Tlicatrcs Corporation, et al. 31 

EXHIBIT 2. 

Amended and Supplemental Complaint, 
filed November 14, 1940. [152] 

Civil Action No. 87-273 

In the District Court of the United States for 
the Southern District of New York 



UNITED STATES OF AMERICA, Plaintiff 

v. 
PARAMOUNT PICTURES, INC., et al., Defendants 



AMENDED AND SUPPLEMENTAL COMPLAINT 



JAMES V. HAYES, 
ROBERT L. WRIGHT, 
ROBERT E. SHER, 
J. STEPHEN DOYLE, JR., 
JOHN F. CLAGETT 
Special Assistants to the Attorney General, 

JAMES M. MALLOY, 

J. FRANK CUNNINGHAM, 

SEYMOUR SIMON, 

Special Attorneys. 

ROBERT H. JACKSON, 

Attorney General, 
THURMAN ARNOLD, 

Assistant Attorney General, 
JOHN T. CAHILL, 

United States Attorney. 

Filed November 14, 1940 [153] 



32 South Side Theatres, Inc., et al. vs. 

In the District Court of the United States for 
the Southern District of New York 



Civil Action No. 87-273 

United States of America, Plaintiff, v. Paramount Pic- 
tures, Inc.; Paramount Film Distributing- Corporation, 
Loew's, Incorporated; Radio-Keith-Orpheum Corporation; 
RKO Radio Pictures, Inc.; Keith- Albee-Orpheum Corpo- 
ration; RKO Proctor Corporation; RKO Midwest Cor- 
poration; Warner Bros. Pictures, Inc.; Vitagraph, Inc.; 
Warner Bros. Circuit Management Corporation; Twen- 
tieth Century-Fox Film Corporation; National Theatres 
Corporation; Columbia Pictures Corporation; Screen 
Gems, Inc. ; Columbia Pictures of Louisiana, Inc. ; Uni- 
versal Corporation; Universal Pictures Company, Inc.; 
Universal Film Exchanges, Inc. ; Big U Film Exchange, 
Inc. ; and United Artists Corporations, Defendants. 



AMENDED AND SUPPLEMENTAL COMPLAINT 

Leave of Court having been first obtained, the United 
States of America, by its attorneys, acting under the 
direction of the Attorney General of the United States, 
hereby amends and supplements the petition filed herein on 
July 20, 1938, and the bills of particulars filed pursuant 
thereto, by substituting therefor this amended and supple- 
mental complaint against the following defendants: 

(1) |154] 



United West Coast Theatres Corporation, et al. 33 

70 

been completed to another theatre operated by the same 
circuit for a continued run or exhibition. This practice, 
which is generally confined to metropolitan areas, reduces 
the box-office value of a picture when it reaches subse- 
quent-run exhibitors. This privilege is seldom, if ever, 
extended to independent exhibitors. 

(p) Overbuying 

In many instances such a circuit of theatres is know- 
ingly permitted by the defendants to contract for the ex- 
hibition in certain theatres operated by it of more films 
than such theatres can profitably exhibit for the purpose 
of withholding such films from competing independent ex- 
hibitors who need them in order to operate their theatres. 
Many pictures so licensed by such circuit theatres are 
never exhibited by them because of their lack of screen- 
time to play them, and yet they are released to competing 
independent exhibitors, if at all, only after the elapse of 
such a length of time after their release that their ex- 
hibition value has been substantially diminished. In other 
cases, the circuit theatres actually exhibit all of the pic- 
tures licensed by them by following a policy of making 
a greater number of weekly program changes than are 
necessary to met the entertainment requirements of their 
patrons. 

B. Conspiracies to unreasonably restrain and monopolize 
the exhibition of motion pictures participated in by 
the producer-exhibitor defendants 

150. All of the producer-exhibitor defendants, each 
well knowing all of the matters and things hereinbefore 
alleged, for many years last past, have combined and con- 
spired with each other to unreasonably restrain and [223] 



34 South Side Theatres, Inc., et at. vs. 

71 

monopolize and pursuant to said combinations and con- 
spiracies have in fact unreasonably restrained and 
monopolized, trade and commerce in the exhibition of mo- 
tion pictures in the United States, in violation of Sec- 
tions 1 and 2 of the Sherman Act, in the following 
manner : 

151. By concertedly conditioning- the licensing of films 
distributed by one producer-exhibitor defendant in theatres 
operated by another such defendant upon the licensing 
of films distributed by the latter defendant in the theatres 
operated by the former defendant. 

152. By concertedly excluding independently produced 
films from affiliated theatres. 

153. By concertedly excluding unaffiliated exhibitors 
from the operation of competing first-run theatres in 
cities and towns where affiliated theatres are located. 

154. By concertedly excluding unaffiliated exhibitors 
from operating competing theatres on the same run as the 
subsequent-run affiliated theatres in the cities and towns 
where such affiliated theatres are located. 

155. By concertedly using the first and early-run af- 
filiated theatres to control the film supply, run, clear- 
ance and admission prices of operators of competing un- 
affiliated theatres in the cities and towns in which affiliated 
theatres are located. 

156. By concertedly coercing and intimidating un- 
affiliated exhibitors located in towns where there are no 
affiliated theatres to license their films upon arbitrary terms 
by expressed or implied threats to build or acquire a com- 
peting theatre and use it to destroy the business of the 
unaffiliated exhibitor. [224] 



United West Coast Theatres Corporation, et al. 35 

72 

157. By concertedly coercing and intimidating exhibi- 
tors located in town where affiliated theatres are located or 
where an affiliated exhibitor desires to locate into re- 
linquishing control of his theatre or a share of the profits 
thereof to the affiliated exhibitor by expressed or im- 
plied threats to deprive him of access to films necessary 
to the successful operation of his theatre or to so limit 
the terms and conditions on which he licenses such films 
that they may no longer be profitably exhibited by him. 

158. By pooling or otherwise sharing with each other 
the profits of affiliated theatres owned or controlled by two 
or more producer-exhibitor defendants, located in the 
same competitive area and frequently operating on the 
same run, which would operate in competition with each 
other except for such pooling or profit sharing agree- 
ments. 

159. By agreeing to divide the available films among 
affiliated theatres owned or controlled by two or more 
producer-exhibitor defendants located in the same com- 
petitive area, without competitive negotiations, in situa- 
tions where such theatres would otherwise compete with 
each other for such films. 

160. By entering into joint arrangements with respect 
to a single theatre, whereby the film buying control or 
proceeds from operation thereof is divided between two 
or more producer-exhibitor defendants. 

161. By concertedly refraining from building, buying 
or offering to lease theatres in areas where they might 
compete with existing affiliated theatres, except under 
agreements preventing competition such as those noted in 
paragraphs 158, 159 and 160 above. [225] 



36 South Side Theatres, Inc., et al. vs. 

EXHIBIT 6. 
Decree, filed December 31, 1946. [277] 

69 

United States District Court 
Southern District of New York 

Equity No. 87-273 
United States of America, Plaintiff, against Paramount 
Pictures, Inc., Paramount Film Distributing Corporation, 
Loew's, Incorporated, Radio-Keith-Orpheum Corporation, 
RKO Radio Pictures, Inc., Keith- Albee-Orpheum Corpo- 
ration, RKO Proctor Corporation, RKO Midwest Corpo- 
ration, Warner Bros. Pictures, Inc., Vitagraph, Inc., 
Warner Bros. Circuit Management Corporation, Twen- 
tieth Century-Fox Film Corporation, National Theatres 
Corporation, Columbia Pictures Corporation, Screen 
Gems, Inc., Columbia Pictures of Louisiana, Inc., Uni- 
versal Corporation, Universal Pictures Company, Inc., 
Universal Film Exchanges, Inc., Big U Film Exchange, 
Inc., and United Artists Corporation, Defendants. 

DECREE 
The court having rendered its opinion herein on June 
11, 1946, having duly considered the proposals of the 
parties and of amici curiae as to its findings and judg- 
ment, and having filed its findings of fact and conclusions 
of law, wherein certain of the defendants herein were 
found to have violated the Act of Congress approved 
July 2, 1890, 26 Stat. 209, commonly known as the Sher- 
man Act, [278] 



United West Coast Theatres Corporation, et al. 37 

It Is Hereby Ordered, Adjudged and Decreed, as fol- 
lows: 

I. 

1. The complaint is dismissed as to the defendants 
Screen Gems, Inc. and the corporation named as Universal 
Pictures Company, Inc., merged during the pendency of 
this case into the defendant Universal Corporation. The 
complaint is also dismissed as to all claims made against 
the remaining defendants herein based upon their acts as 
producers, whether as individuals or in conjunction with 
others. 

II. 

Each of the defendant distributors, Paramount Pictures, 
Inc.; Paramount Film Distributing Corporation; Loews. 
Incorporated; Radio-Keith-Orpheum Corporation; RKO 
Radio Pictures, Inc.; Warner Bros. Pictures, Inc.; War- 
ner Bros. Pictures Distributing Corporation [formerly 
known as Vitagraph, Inc.] ; Twentieth Century-Fox Film 
Corporation; Columbia Pictures Corporation; Columbia 
Pictures of Louisiana, Inc.; Universal Corporation; Uni- 
versal Film Exchanges, Inc.; Big U Film Exchange, 
Inc. ; and United Artists Corporation; and the successors 
of each of them, and any and all individuals who act in 
behalf of any thereof with respect to the matters en- 
joined, and each corporation in which said defendants or 
any of them own a direct or indirect stock interest of 
more than fifty per cent, is hereby enjoined: 

1. From granting any license in which minimum prices 
for admission to a theatre are fixed by the parties, either 
in writing or through a committee, or through arbitration, 
or upon the happening of any event or in any manner or 
by any means. 



38 South Side Theatres, Inc., et al. vs. 

2. From agreeing with each other or with any exhibi- 
tors or distributors to maintain a system of clearances; 
the term "clearances" as used herein meaning the period 
of time stipulated in license contracts which must elapse 
between runs of the same feature within a particular area 
or in specified theatres. 

3. From granting any clearance between theatres not 
in substantial competition. 

4. From granting or enforcing any clearance against 
theatres in substantial competition with the theatre receiv- 
ing the license for exhibition in excess of what is reason- 
ably necessary to protect the license in the run granted. 
Whenever any clearance provision is attacked as not legal 
under the provisions of this decree, the burden shall be 
upon the distributor to sustain the legality thereof. 

5. From further performing any existing franchise to 
which it is a party and from making any franchises in the 
future. The term "franchise" as used herein means a 
licensing agreement or series of licensing agreements, en- 
etered into as a part of the same transaction, in effect 
for more than one motion picture season and covering the 
exhibition of pictures released by one distributor during 
the entire period of agreement. 

6. From making or further performing any formula 
deal or master agreement to which it is a party. The 
term "formula deal" as used herein means a licensing 
agreement with a circuit of theatres in which the license 
fee of a given feature is measured for the theatres cov- 
ered by the agreement by a specified percentage of the 
feature's national gross. The term "master agreement" 
means a licensing agreement, also known as a "blanket 
deal" covering the exhibition of features in a number of 
theatres usually comprising a circuit. 



United West Coast Theatres Corporation, et al. 39 

7. From performing or entering into any license in 
which the right to exhibit one feature is conditioned upon 
the licensee's taking one or more other features. To the 
extent [279] that any of the features have not been trade 
shown prior to the granting of the license for more than 
a single feature, the licensee shall be given by the licensor 
the right to reject twenty per cent of such features not 
trade shown prior to the granting of the license, such right 
of rejection to be exercised in the order of release within 
ten days after there has been an opportunity afforded to 
the licensee to inspect the feature. 

8. From licensing in the fture any feature for exhibi- 
tion in any theatre, not its own, in any manner except the 
following : , 

(a) A license to exhibit each feature released for 
public exhibition in any competitive area shall be 
offered to the operator of each theatre in such area 
who desires to exhibit it on some run [other than that 
upon which such feature is to be exhibited in the 
theatre of the licensor] selected by such operator, and 
upon uniform terms; 

(b) Each license shall be granted solely upon the 
merits and without discrimination in favor of affili- 
ates, old customers or others ; 

(c) Where a run is desired, or is to be offered, 
upon terms which exclude simultaneous exhibition in 
competing theatres, the distributor shall notify, not 
less than thirty days in advance of the date when 
bids will be received, all exhibitors in the competitive 
area, offering to license the features upon one or more 
runs, and in such offer shall state the amount of a 
flat rental as the minimum for such license for a 



40 South Side Theatres, Inc., et al. vs. 

specified number of days of exhibition, the time when 
the exhibition is to commence and the availability and 
clearance, if any, which will be granted for each such 
run. Within fifteen days after receiving such notice, 
any exhibitor in such competitive area may bid for 
such license, and in his bid shall state what run such 
exhibitor desires and what he is willing to pay for 
such feature, which statement may specify a flat 
rental, or a percentage of gross receipts, or both, or 
any other form of rental, and shall also specify what 
clearance such exhibitor is willing to accept, the time 
and days when such exhibitor desires to exhibit it, 
and any other offers which such exhibitor may care 
to make. The distributor may reject all offers made 
for any such feature, but in the event of the accept- 
ance of any, the distributor shall grant such license 
upon the run bid for to the highest responsible bidder, 
having a theatre of a size, location and equipment ade- 
quate to yield a reasonable return to the licensor. 
The method of licensing specified in this subdivision 
shall not be required in areas where there is no com- 
petition among theatres or in run, or in which there is 
no offer made by any exhibitor within the time above 
mentioned. The words "exclude simultaneous exhibi- 
tion" shall be held to mean the exhibition of a specified 
run in one theatre with clearance over other theatres 
in the competitive area. The words "competitive area" 
shall refer to the territory occupied by more than one 
theatre in which it may fairly and reasonably be said 
that such theatres compete with each other for the 
exhibition of features on any run. 

(d) Each license shall be offered and taken theatre 
by theatre and picture by picture. 



United West Coast Theatres Corporation, et al. 41 

(e) A theatre is not a defendant's own theatre un- 
less it owns therein a legal or equitable interest of 
ninety-five per cent or more, either directly or through 
affiliates or subsidiaries. 

9. From arbitrarily refusing the demand of an ex- 
hibitor, who operates a theatre in competition with another 
theatre not owned or operated by a defendant distributor, 
or its affiliate or subsidiary, made by registered mail, ad- 
dressed to the home office of the distributor, to license a 
feature to him [280] for exhibition on a run selected by 
the exhibitor, instead of licensing it to another exhibitor 
for exhibition in his competing theatre on such run. 
Such demand shall be deemed to have been refused either 
upon the receipt by the exhibitor of a refusal in writing 
or upon the expiration of ten days after the receipt of the 
exhibitor's demand. 

III. 

Each of the defendant exhibitors, Paramount Pictures, 
Inc., Loews, Incorporated, Radio-Keith-Orpheum Corpo- 
ration, Keith-Albee-Orpheum Corporation, RKO Proctor 
Corporation, RKO Midwest Corporation, Warner Bros. 
Pictures, Warner Bros. Circuit Management Corporation, 
Twentieth Century-Fox Film Corporation, and National 
Theatres, Inc. is hereby enjoined and restrained: 

( 1 ) From performing or enforcing agreements referred 
to in paragraphs 5 and 6 of the foregoing section II 
hereof to which it may be a party. 

(2) From making or continuing to perform pooling 
agreements whereby given theatres of two or more ex- 
hibitors normally in competition are operated as a unit or 
whereby the business policies of such exhibitors are col- 



42 South Side Theatres, Inc., et al. vs. 

lectively determined by a joint committee or by one of 
the exhibitors or whereby profits of the "pooled" theatres 
are divided among the owners according to prearranged 
percentages. 

(3) From making or continuing to perform agreements 
that the parties may not acquire other theatres in a com- 
petitive area where a pool operates without first offering 
them for inclusion in the pool. 

(4) From making or continuing leases of theatres un- 
der which it leases any of its threatres to another defend- 
ant or to an independent operating a theatre in the same 
competitive area in return for a share of the profits. 

(5) From continuing to own or acquiring any bene- 
ficial interest in any theatre, whether in fee or shares of 
stock or otherwise, in conjunction with another defendant, 
and from continuing to own or acquire such an interest 
in conjunction with an independent [meaning any former, 
present or putative motion picture theatre operator which 
is not owned or controlled by the defendant holding the 
interest in question], where such interest shall be greater 
than five per cent unless such interest shall be ninety-five 
per cent or more. The existing relationships which violate 
this provision shall be terminated within two years. The 
relationships between the defendants and independents 
which violate this provision shall be terminated by a sale 
to, or purchase from the co-owner or co-owners, or by a 
sale to a party not one of the other defendants. In dis- 
solving relationships among defendants and between de- 
fendants and independents which violate this provision, 



United West Coast Theatres Corporation, et at. 43 

one defendant may acquire the interest of another de- 
fendant or independent if such defendant desiring to ac- 
quire such interest shall show to the satisfaction of the 
court, and the court shall first find, that such acquisition 
will not unduly restrain competition in the exhibition of 
feature motion pictures. Each of the defendants shall 
submit to this court within six months a statement out- 
lining the extent to which it has complied and the manner 
in which it proposes to comply with this provision, setting 
forth in detail the names, locations, and general descrip- 
tions of the theatres, corporate securities, and beneficial in- 
terests of any kind involved, the sales thereof that it has 
made, and such interests as it proposes to acquire, with a 
statement of facts regarding each competitive situation in- 
volved in such proposed acquisition sufficient to show the 
probable effect of such acquisition on that situation. 
Similar reports shall be made quarterly thereafter until this 
provision shall have been fully complied with. Reasonable 
notice of such acquisition plans shall be served upon the 
Attorney General and plaintiff shall be given an oppor- 
tunity to be heard with respect thereto before any such 
acquisition shall be approved by the court. [281] 

(6) From expanding its present theatre holdings in 
any manner whatsoever except as permitted in the pre- 
ceding paragraph. 

(7) From operating, booking, or buying features for 
any of its theatres through any agent who is known by it 
to be also acting in such manner for any other exhibitor, 
independent or affiliate. 



44 South Side Theatres, Inc., et al. vs. 

IV. 

Nothing contained in this Decree shall be construed to 
limit, in any way whatsoever, the right of each distributor- 
defendant to license, or in any way to arrange or provide 
for, the exhibition of any or all the motion pictures which 
it may at any time distribute, in such manner, and upon 
such terms, and subject to such conditions as may be sat- 
isfactory to it, in any theatre in which such distributor- 
defendant has or may acquire pursuant to the terms of 
this Decree, a proprietary interest of ninety-five per cent 
or more either directly or through subsidiaries. 

V. 

The provisions of the existing consent decree are here- 
by declared to be of no further force or effect, except 
insofar as may be necessary to conclude arbitration pro- 
ceedings now pending and to liquidate in an orderly man- 
ner the financial obligations of the defendants and the 
American Arbitration Association, incurred in the estab- 
lishment of the consent decree arbitration systems. Exist- 
ing awards and those made pursuant to pending proceed- 
ings shall continue to be enforceable. But this shall in 
no way preclude the parties or any other persons from 
setting up a reasonable system of arbitration either through 
the use of the present boards or any others as among 
themselves. 

VI. 

For the purpose of securing compliance with this De- 
cree, and for no other purpose, duly authorized repre- 



United West Coast Theatres Corporation, et al. 45 

sentatives of the Department of Justice shall, on written 
request of the Attorney General or the Assistant Attor- 
ney General in charge of antitrust matters, and on notice 
to any defendant, reasonable as to time and subject matter, 
made to such defendant at its principal office, and subject 
to any legally recognized privilege, (1) be permitted rea- 
sonable access, during the office hours of such defendant, 
to all books, ledgers, accounts, correspondence, memo- 
randa and other records and documents in the possession 
or under the control of such defendant, relating to any 
of the matters contained in this Decree, and that during 
the times that the plaintiff shall desire such access, counsel 
for such defendant may be present, and (2) subject to the 
reasonable convenience of such defendant, and without 
restraint or interference from it, be permitted to interview 
its officers or employees regarding any such matters, at 
which interview counsel for the officer or employee inter- 
viewed and counsel for such defendant company may be 
present. 

Information obtained pursuant to the provisions of this 
section shall not be divulged by any representative of the 
Department of Justice to any person other than a duly 
authorized representative of the Department of Justice, 
except in the course of legal proceedings to which the 
United States is a party, or as otherwise required by law. 

VII. 

Paragraphs 7 and 8 of section II of this judgment shall 
not become effective until July 1, 1947. [282] 



46 South Side Theatres, Inc., et al. vs. 

VIII. 

Jurisdiction of this cause is retained for the purpose of 
enabling- any of the parties to the judgment and no others, 
to apply to the court at any time for such orders or direc- 
tion as may be necessary or appropriate for the construc- 
tion, modification, or carrying out of the same, for the 
enforcement of compliance therewith, and for the punish- 
ment of violations thereof, or for other or further relief. 

IX. 

The operation of this judgment is stayed for sixty days 
from the date hereof, and, if an appeal is taken, for thirty 
days thereafter in order to enable any appellant to move 
before the Supreme Court for a stay in respect to any 
portion of the judgment from which an appeal has been 
taken. 

Dated, December 31, 1946. 

AUGUSTUS N. HAND 
United States Circuit Judge 

HENRY W. GODDARD 
United States District Judge 

JOHN BRIGHT 

United States District Judge [283] 



[Endorsed] : Filed Aug. 28, 1947. Edmund L. Smith, 
Clerk. [284] 



United West Coast Theatres Corporation, et al. 47 

In the District Court of the United States 

Southern District of California 

Central Division 

No. 7282-BH 

UNITED WEST COAST THEATRES CORPORA- 
TION, et al., 

Plaintiffs, 

vs. 
SOUTH SIDE THEATRES, INC, et al., 

Defendants, 
and 
TWENTIETH CENTURY-FOX FILM CORPORA- 
TION, et al., 

Third Party Defendants. 

ORDER TO SHOW CAUSE 

Good cause appearing, the court on its own motion di- 
rects that all parties interested in the above entitled action, 
appear before this court on Monday, June 21, 1948, at 
10:00 o'clock A. M., to show cause if any they have, why 
the above entitled action should not be dismissed upon the 
ground that said original cause of action has become 
moot and/or the Receiver heretofore appointed should not 
be discharged upon the ground that the necessity for said 
receivership no longer exists. 

Dated: June 3rd, 1948. 

BEN HARRISON 

Judge 

[Endorsed] : Filed Jun. 3, 1948. Edmund L. Smith, 
Clerk. [353] 



48 South Side Theatres, Inc., et al. vs. 

In the District Court of the United States for the 

Southern District of California 

Central Division 

Civil Action No. 7282-BH 

UNITED WEST COAST THEATRES CORPORA- 
TION and FOX WEST COAST AGENCY COR- 
PORATION, 

Plaintiffs, 

vs. 

SOUTH SIDE THEATRES, INC and MARCO 
WOLFF, FANCHON SIMON, ROY N. WOLFF 
and RUBE WOLFF, Joint Venturers, Doing Busi- 
ness Under the Name of SOUTH SIDE ASSO- 
CIATES, 

Defendants. 

ORDER ALLOWING TEMPORARY RECEIVER 
INTERIM COMPENSATION 

The Court having appointed Frank Millan temporary 
receiver to take charge of and operate the Alto Theatre 
Building and the Alto Theatre located therein at 8862 
South Western Avenue, Los Angeles, California, and said 
temporary receiver having entered upon the discharge of 
his duties, and it appearing to the court that said tem- 
porary receiver is without independent means and without 
employment other than as such temporary receiver, 

It Is Hereby Ordered that interim compensation in the 
amount of $100.00 per week on account of said temporary 
receiver's fees be paid to him out of the funds coming into 
his hands from [354] the operation of the said Alto 



United West Coast Theatres Corporation, et al. 49 

Theatre Building and the Alto Theatre located therein, 
commencing July 1, 1947 and continuing until the further 
order of this court. 

Dated: July 8, 1947. 

BEN HARRISON 

Judge 

Approved : 
MACFARLANE, SCHAEFER AND HAUN 
By William Gamble 

Attorneys for Defendants 

[Endorsed] : Filed Jul. 8, 1947. Edmund L. Smith, 
Clerk. [355] 



[Title of District Court and Cause] 

NOTICE OF MOTION TO DISMISS AND TO 
SUMMON THE UNITED STATES OF AMERI- 
CA AS A PARTY 

To United West Coast Theatres Corporation and Fox 
West Coast Agency Corporation, plaintiffs and to 
Messrs. Loeb & Loeb, their attorneys. 

You and Each of You Will Please Take Notice that on 
the 8th day of September, 1947, at the hour of 10:00 
o'clock A. M., in the courtroom of the Hon. Ben Harri- 
son, Judge of the above entitled court, the defendants, 
South Side Theatres, Inc., Marco Wolff, Fanchon Simon, 
Roy N. Wolff and Rube Wolff, joint venturers, doing 
business under the name of South Side Associates, will 
move the Court as follows: 



50 South Side Theatres j Inc., et al. vs. 

1. To dismiss the action on the grounds that the com- 
plaint fails to state a claim against the defendants upon 
which relief can [356] be granted; and that the above 
entitled Court is without jurisdiction to hear the matter; 

2. To order the United States of America to be sum- 
moned to appear in this action. 

This motion is based upon the accompanying memo- 
randum of Points and Authorities. 

Defendants reserve the right to answer the complaint 
on file herein after ruling of the Court on the foregoing 
motions. 

Dated: August 25th, 1947. 

MACFARLANE, SCHAEFER & HAUN 
HENRY SCHAEFER, JR. 
WILLIAM P. GAMBLE 
JAMES H. ARTHUR 
By Henry Schaefer, Jr. 

Attorneys for Defendants 

RUSSELL HARDY 
Of Counsel [357] 

Received copy of the within Notice of Motion to Dis- 
miss, etc., this 26 day of Aug., 1947. Loeb & Loeb, by 
C. Young, attorneys for pltfs. 

[Endorsed] : Filed Aug. 26, 1947. Edmund L. Smith, 
Clerk. [358] 



United West Coast Theatres Corporation, et al. 51 
[Title of District Court and Cause] 

WAGE AGREEMENT APPROVAL 

Petition is hereby presented to this Honorable Court 
for approval of the wage scale and working agreement 
executed between the Moving Picture Projectionists Lo- 
cal No. 150, International Alliance of Theatrical Stage 
Employees and Moving Picture Machine Operators of 
the United States and Canada, and the Alto Theater, 
through Frank Millan, Receiver for the same, duly ap- 
pointed by order of this Court, which agreement was exe- 
cuted February 4, 1948. 

The agreement provides for an increase in wage scales 
and is the same generally as executed by other theaters in 
this area. 

The agreement has been examined by William Gamble, 
of the Law Firm of Macfarlane, Schaefer & Haun, attor- 
neys for defendants, and by Edward J. O'Connor, of the 
Law Firm of O'Connor & O'Connor, attorneys for the 
Receiver, Frank [359] Millan. The Agreement, which 
is attached to and made a part of this petition, is ap- 
proved. 

MACFARLANE, SCHAEFER & HAUN 
By William Gamble 

Attorneys for Defendants 

O'CONNOR & O'CONNOR 
By Edward J. O'Connor 

Attorneys for Receiver 

The same is hereby approved: 

BEN HARRISON 

United States District Judge [360] 



52 South Side Theatres, Inc., et at. vs. 

WAGE SCALES 

and 

WORKING AGREEMENT 

Between 

MOVING PICTURE PROJECTIONISTS 

LOCAL NO. 150 

International Alliance of Theatrical Stage Employees and 

Moving Picture Machine Operators of the 

United States and Canada 

and 

For Alto Theatre 
In Los Angeles, California 

This Agreement made and entered into this 

day of February, 1948, by and between 

in the city of Los Angeles, 

State of California, party of the first part, and Moving 
Picture Projectionists, Local No. 150, International Al- 
liance of Theatrical Stage Employees and Moving Picture 
Operators of the United States and Canada (a voluntary 
unincorporated association) of Los Angeles, State of 
California, party of the second part; 

Witnesseth : 

Party of the first part hereby agrees to employ only 
those Projectionists furnished by the party of the second 
part in any and all projection rooms in which the party of 
the first part is now, or may become, interested in during 
the life of this agreement. 

Party of the second part hereby agrees to supply the 
party of the first part with Projectionists during the life 
of this agreement, and to make every effort to keep these 
positions filled with competent Projectionists. 



United West Coast Theatres Corporation, et al. 53 

It Is Mutually Agreed by the parties to this agreement 
that the following wage scales and working conditions 
shall be in effect during the life of this agreement: [361] 

THEATRE OPERATING POLICY 

1 Regular Projectionists per shift 
4 Days of Sy 2 Hours each 

2 Days of 10 Hours each 

Sat. & Sun. 

3 hours Preparatory Time per week 

at straight time rate. 
1 hour Build-up Time on change Basic weeky 

day at overtime rate. rate per man $101.25 

Part-time Projectionist : 

1 Days oi Sy 2 Hours each 
y 2 hour Preparatory Time at Basic weekly 

straight time rate. rate per man $13.50 

SCHEDULE OF RATES 

Basic Rate: $2.25 per hour 
Overtime : 

From 8 A. M. to 12:30 midnight $3.38 per hour 

From 12:30 midnight to 8 A. M. $3.38 per hour 

Section 5, Page 3: $3.38 per hour 

Section 15, Page 3: $3.38 per hour 

Extra Matinees: 

Legal Holidays: (New Year's Day, 
Memorial Day, Fourth of July, La- 
bor Day, Armistice Day, Thanks- 
giving Day and Christmas). (Mini- 
mum charge of four hours) $3.38 per hour 

Other Days : ( Minimum charge of two 

hours) $3.38 per hour 



54 South Side Theatres, Inc., et al. vs. 

Extra Weekly Matinees: 

If matinees are run daily for a period of two weeks or 
more, the straight time rate will be paid for these matinees. 

If matinees are run daily for a period of less than two 
weeks, the extra matinee rate will be paid for these mati- 
nees. [362] 

WORKING CONDITIONS 

1. Projectionists shall work not more than six days 
per week. In theatres and projection rooms operating 
seven days per week a swing man shall be employed one 
day per week for each projectionist employed. 

2. Vacations 

A. Full Time Employees 

Projectionists who have been regularly em- 
ployed by the Company for one year or more, 
but less than two years, shall receive 1 weeks' 
vacation with pay. Projectionists who have 
been regularly ' employed by the Company for 
two years or more shall receive 2 weeks' vaca- 
tion with pay. Employment time shall be retro- 
active and the vacation status of the projec- 
tionist shall be determined by his length of em- 
ployment in a theatre or theatres regardless of 
the length of time of ownership. Vacation pay 
shall be at the base weekly rate per man as 
specified on Page 2 of this contract. 

B. Part Time Employees 

Projectionists regularly employed for one year 
or more, but less than two years, shall receive 
pro rata vacation time with pay. Projection- 
ists who have been employed for two years or 



United West Coast Theatres Corporation, et al. 55 

more shall receive double the pro rata vacation 
time with pay. 

C. For the purpose of figuring- vacation time, the 
fiscal year for each projectionist shall be estab- 
lished from the starting date of his employ- 
ment, i.e: A projectionist starting to work in 
a theatre on July 15, 1947 would be entitled to 
a vacation on or after July 15, 1948. 

D. The Party of the Second Part agrees to fur- 
nish the Party of the First Part a record of 
employment for each projectionist upon his re- 
quest for vacation. 

3. A. Each projectionist on the opening shift shall 

report thirty (30) minutes ahead of show time 
for the necessary work to prepare the equip- 
ment for the start of the performance. Neces- 
sary work shall be defined as : checking sound 
system for proper operation, cleaning mirrors, 
condensors, lenses, machines, generators, recti- 
fiers and any other pieces of equipment used in 
the projection room. No records or effects 
shall be run on preparatory time. No inspec- 
tion of film or building up of show or trailers 
shall be done on preparatory time. Prepara- 
tory time shall be paid for at the straight time 
rate. 

B. Each regular projectionist shall receive one-half 
hour build-up time each change day at overtime 
rate; this time to be used to prepare the film 
for running. 

4. There shall be a minimum basic scale of $1.50 per 
hour established in all theatres. 



56 South Side Theatres, Inc., et al. vs. 

5. All overtime will be paid for at the rate of time 
and one-half of the basic hourly scale. 

6. All regular performance time after 12:30 midnight 
will be paid for at the rate of time and one-half of the 
basic scale, irrespective of whether regular shift time is 
completed or not. 

7. Overtime shall be paid for as follows : five to fifteen 
minutes, one quarter hour; more than fifteen minutes, one 
half hour; more than one half hour, forty-five minutes; 
more than forty-five minutes, one hour. This leeway is 
allowed for contingencies but is to be used in good faith 
and not as a regular daily practice. 

8. Records or effects run before or after the per- 
formance will be considered as part of that performance 
and all projectionists working on that shift shall be on 
duty and shall be paid accordingly. [363] 

9. Special Performances 

A. Projectionists running a special performance 
in the morning or prior to the starting time 
of a scheduled matinee or a continuous daily 
policy shall receive overtime pay with a mini- 
mum of two hours. Any performance run in 
the morning or afternoon when no perform- 
ance is regularly scheduled will be considered 
an extra matinee. 

B. Projectionists running any performance or 
screening after the close of the regular per- 
formance shall receive overtime pay from the 
time the regular shift ends until completion of 
the work. 



United West Coast Theatres Corporation, et al. 57 

10. Projectionists called for stage show rehearsals, or 
screening of any film, before the regular performance 
shall receive overtime pay from the time designated to re- 
port for duty. There will be a minimum charge of two 
hours pay if there is more than one hour break between 
completion of work and starting time of the shift. If the 
work is done after the regular performance, projectionist 
shall receive overtime pay from the time the regular shift 
ends until completion of the work. 

1.1. Theatres not operating on a continuous, or split, 
daily policy will pay extra matinee rate as shown in sched- 
ule on page two when running extra matinees. 

12. Theatres running on an all-night policy seven days 
per week shall pay the hourly rate set forth in schedule 
on Page 2, with a guarantee of four and one-half hours 
per man per shift. 

13. Road Shows 

The Party of the First Part agrees that in all thea- 
tres of one-thousand seats or less running first run pic- 
tures advertised as road shows, or charging admission 
above established first-run admission, and not carrying 
equipment, and selling reserved seats, each projectionist 
shall receive six hours' pay at Class A scale for each 
performance. In theatres of more than one-thousand 
seats, selling reserved seats, there shall be two projec- 
tionists per shift, each projectionist shall receive six 
hours' pay at Class A scale for each performance. In 
all other theatres within the jurisdiction of Local ISO 
running first-run pictures advertised as Road Shows or 
charging admission above established first-run admission, 
and not selling reserved seats, the projectionist shall re- 
ceive Class A scale for a six hour shift. Class A shall be 



58 South Side Theatres, Inc., et al. vs. 

interpreted to mean Class A scale of Metropolitan Los 
Angeles. 

14. At any time that theatres under the jurisdiction 
of Local ISO are used by Producers for testing or run- 
ning pictures, and services of projectionists of Local ISO 
are required by the Producers, the scales entered into for 
this work by Local 150 with such Producers shall be ac- 
ceptable to management. 

15. All maintenance work outside of the projection 
room in such theatres where stage employees are not em- 
ployed may, if requested by the Party of the First Part, 
be done by the projectionist at the regular overtime rate. 
However, projectionists will not be required to perform 
any work that properly comes under the jurisdiction of 
another craft. 

16. When the mixing panel, or other method of con- 
trol, for a public address system is installed in the projec- 
tion room the regular crew will be permitted to turn this 
equipment on at the start of the stage performance, and 
turn it off at the end of the stage performance. If any 
adjustment or manipulation of the equipment is done dur- 
ing the stage performance an additional projectionist shall 
be employed and he shall receive $4.14 per performance. 
Each separate time that the stage performance is pre- 
sented shall be considered as one performance. 

17. Any theatre, while using sound dummies, will 
employ an additional projectionist on each shift, projec- 
tionist shall receive regular projection room scale for that 
shift, and at the option of the Party of the First Part 
may be required to work full shift time. This section 
applies to regular performances and not to studio or press 
previews. 



United West Coast Theatres Corporation, et al. 59 

18. Any theatre, while using auditorium fader, will 
employ an additional projectionist on each shift, projec- 
tionist shall receive regular projection room scale for that 
shift, and at option of the Party of the First Part may 
be required to work full shift time. This section applies 
to regular performances and not to studio or press pre- 
views. [364] 

19. One projectionist shall be on duty at the following 
times, and shall receive the overtime rate of pay: (1) 
During the original installation of projection or sound 
equipment or replacement thereof; or (2) the servicing of 
any projection or sound equipment; or (3) the testing 
thereof; or (4) screen illumination tests; or (5) the re- 
pair or installation of any apparatus or electrical appliance 
directly or indirectly used by the projectionists in connec- 
tion with the presentation of the show. If the work is 
performed two hours or more prior to the starting time 
of the performance, there shall be a minimum charge of 
two hours' pay. If the work is performed after the close 
of the show, the projectionist shall be paid from the time 
the original shift ends until the work is completed. If 
the work is performed less than two hours prior to the 
starting time of the shift, the projectionist shall be paid 
for the time actually consumed. 

20. It is understood that management shall have access 
to the projection booth at all times. The projectionist 
may be called at the direction and discretion of manage- 
ment. It Is Further Mutually Agreed that the projec- 
tionist assumes no responsibility for the condition of the 
booth or equipment when work has been done by other 
craftsmen during his absence. 

21. The Employer agrees that the Business Manager 
of the Union, or his duly authorized representative, shall 



60 South Side Theatres, Inc., et al. vs. 

have access to the premises of the theatre at all reasonable 
times without charge for the purposes of attending to such 
business of the Union as they may deem necessary either 
with the Employer or with any operator there employed. 

22. The screening of one reel consisting of one sub- 
ject not exceeding 2000 feet in length, in such theatres 
employing two or more projectionists per shift, shall re- 
quire only one projectionist on duty, providing the screen- 
ing is run before or after the performance and is not a 
part of the performance. If more than one reel or more 
than one subject is run on this screening, all projectionists 
on that shift must be on duty. 

23. Except in cases of emergency, projectionists will 
not be required or permitted to perform those services cus- 
tomarily done by sound service engineers. An emergency 
sound repair will constitute a repair when the performance 
has actually been interrupted or might possibly be inter- 
rupted. 

24. When performance time is not consumed in sched- 
ule, balance of time shall be used for any additional work 
necessary in the projection room, if requested by Party 
of the First Part. 

25. It Is Mutually Agreed that the employment of 
projectionists shall be in conformity with the Seniority 
Laws of the Party of the Second Part. 

26. Cloth towels, drinking water and soap shall be 
furnished by the theatre, one clean towel each day for 
each projectionist employed. 



United West Coast Theatres Corporation, et at. 61 

27. Studio Or Press Preview: 

Theatres employing two men per shift — 

Studio preview on composite print: Regular 

crew only. 
Studio preview with separate sound track con- 
sisting of two reels or less: Regular crew 
only. 
Studio preview with separate sound track con- 
sisting of more than two reels: Regular 
crew, and one extra projectionist. 
When auditorium fader is used one extra pro- 
jectionist is required to operate same. 

Theatres employing one man per shift — 

Studio previews on composite print: Regular 
projectionist and one extra projectionist. 

Studio previews with separate sound track con- 
sisting of two reels or less: Regular projec- 
tionist and one extra projectionist. 

Studio previews with separate sound track con- 
sisting of more than two reels : Regular pro- 
jectionist and two extra projectionists. 

When auditorium fader is used one extra pro- 
jectionist is required to operate same. [365] 

28. Extra projectionists called to work on Studio Pre- 
views shall receive $13.80 for each preview. They will 
report for work at the beginning of the shift on which the 
preview is to be run and shall remain on duty until the 
preview has been run. However, if sound dummies are 
to be dismantled and are dismantled immediately after the 
preview, the extra projectionists will remain on duty until 
the dummies have been dismantled. 



62 South Side Theatres, Inc., et al. vs. 

29. A projectionist will not be required to operate 
more than one spotlight. 

A projectionist may operate one spotlight and one 
stereoptican providing both pieces of equipment can be 
operated from one station. 

A projectionist may operate one spotlight and one flood- 
light providing both pieces of equipment can be operated 
from one station. 

A projectionist may operate one spotlight and one effect 
machine providing both pieces of equipment can be oper- 
ated from one station. 

A projectionist may operate one steroptican and one 
effect machine providing both pieces of equipment can be 
operated from one station. 

30. Projectionists will not be required or permitted to 
furnish sound testing equipment or other equipment other 
than the necessary tools for projection work. 

31. Projectionists will not be required or permitted to 
leave the projection room while on shift, except in case of 
dire emergency. 

32. All installation of projection machines and equip- 
ment and repair of same shall be done by members of the 
Party of the Second Part when done in the jurisdiction 
of Local ISO. 

33. All work of any nature to be performed in the 
projection room before the start of the performance, shall 
be done by members of the opening shift in that theatre; 
likewise any such work to be done at the close of the per- 
formance shall be done by members of the closing shift. 
A member of either shift will be permitted to assist in the 



United West Coast Theatres Corporation, et al. 63 

performance of this work on the opposite shift, providing 
no member of that shift is displaced. 

34. At any time that a theatre company wishes to 
transfer one of its projectionists from one theatre to an- 
other theatre operated by that company, the projectionist 
shall receive at least one week's notice in writing of such 
transfer. The transfer shall only be made with the mu- 
tual consent of the projectionist. 

35. Any theatre making a change in policy, or change 
in hours of operation, shall give the projectionists one 
week's notice in writing of such change of policy or hours 
of operation when such change will reduce the projec- 
tionists' salary. 

36. A. Chief Projectionists and Supervisors of Pro- 

jection shall be members of the Party of the 
Second Part; and their appointment as Chief 
Projectionist, or Supervisor of Projection, 
must be confirmed in writing to the Party 
of the Second Part by the Party of the First 
Part; otherwise the appointment will not be 
recognized by the Party of the Second Part. 

B. When there is a Chief Projectionist, or Su- 
perviser of Projection, named by the Party 
of the First Part, all notices of termination of 
services of projectionists furnished by the 
Party of the Second Part shall be given in 
writing by said Chief Projectionist or Su- 
pervisor of Projection. 



64 South Side Theatres, Inc., et al. vs. 

37. A. The Party of the First Part agrees that 
when desiring- to dispense with the services 
of a projectionist furnished by the Party of 
the Second Part, he will give the projection- 
ist two weeks' notice in writing, said notice 
to be considered as starting with the next pay- 
roll week or two weeks' salary in lieu there- 
of, except in case of drunkenness, dishonesty 
or incompetency, in which case notice will not 
be required. A projectionist may be con- 
sidered incompetent when it is established 
that he is unable to perform his duties in the 
theatre wherein he is employed. 

B. Projectionists furnished by the Party of the 
Second Part who desire to leave the employ- 
ment of the Party of the First Part will give 
the Party of the First Part two weeks' no- 
tice, said notice to be considered as starting 
with the next payroll week. The two weeks' 
notice referred to in this clause may be waived 
in writing with the mutual consent of both 
parties. [366] 

38. The Party of the First Part further agrees that 
in the event he dispenses with the services of any pro- 
jectionist hired under this agreement, or said projectionist 
leaves the employment of the Party of the First Part for 
any reason whatsoever, said Party of the First Part will 



United West Coast Theatres Corporation, et al. 65 

replace the employee leaving with another projectionist 
that is furnished by the Party of the Second Part. 

39. Motion picture films and records shall be delivered 
to, and picked up from the projection room, by the Party 
of the First Part, or his agent, who is not a member of 
the Party of the Second Part. 

40. Projectionists shall not be requested or required to 
perform any act that is in violation of the terms of this 
agreement, or the Constitution and By-Laws of the Party 
of the Second Part. 

41. The Party of the First Part hereby agrees that 
before the opening date of any theatre hereafter acquired 
he will confer with the Party of the Second Part and 
enter into negotiation of scale for same. 

42. It is further mutually agreed that the Party of 
the First Part will at all times during the life of this 
agreement employ only members of the present affiliated 
unions of Local 150, as such affiliates are presently con- 
stituted, in their proper departments. 

43. It is further mutually agreed that inasmuch as 
the Party of the Second Part is a member of the Interna- 
tional Alliance of Theatrical Stage Employees and Mov- 
ing Picture Machine Operators of the United States and 
Canada, nothing in this agreement shall ever be construed 
as interfering with any obligation the Party of the Sec- 
ond Part owes to such International Alliance of Theatri- 
cal Stage Employees and Moving Picture Machine Opera- 



66 South Side llxc aires, Inc., et al. vs. 

tors of the United States and Canada, by reason of a prior 
obligation. 

In Testimony Whereof, the parties hereto have set their 
hands and seals, and this agreement will be in force and 
binding from the 1st day of July, 1947, and shall continue 
in force and binding until the 30th day of June, 1949. 

Frank Millan 

Party of the First Part 

Geo A. Schaffer 
Business Manager 

W. G. Crowley 

President 

Moving Picture Projection- 
ists, Local No. 150, Interna- 
tional Alliance of Theatrical 
Stage Employees and Moving 
Picture Machine Operators of 
the United States and Canada. 
Party of the Second Part. 

(Seal) 

[ Endorsed 1 : Filed Feb. 26, 1948. Edmund L. Smith, 
Clerk. [367] 



United West Coast Theatres Corporation, et al. 67 

In the District Court of the United States for the 
Southern District of California 

Civil Action No. 7282-BH 

UNITED WEST COAST THEATRES CORPORA- 
TION, et al., 

Plaintiffs, 
vs. 
SOUTH SIDE THEATRES, INC., et al., 

Defendants, 
TWENTIETH CENTURY-FOX FILM CORPORA- 
TION, et al., 

Third Party Defendants. 

OBJECTIONS TO MOTION OF RECEIVER, 
FRANK MILLAN 

Now comes the defendants South Side Theatres, Inc., 
Marco Wolff, Fanchon Simon, Roy N. Wolff and Rube 
Wolff and file these their objections to the granting of 
the motion of the receiver, Frank Millan for an extension 
of time within which to file his final report. The ob- 
jection to the granting of said motion is based on the 
grounds : 

1. That during the continuance of the receivership, 
these defendants have never received any reports or ac- 
counts from the said receiver. 

2. That defendants have not received any payments 
of rent for the building, all of which the defendants were 
entitled to under the provisions of the agreement which 
was made the basis of the action. [368] 

3. That defendants have received no distribution of 
monies from the receiver during the continuance of said 
receivership, and all of the said monies have accumulated 
in the hands of the receiver. 



68 South Side Theatres, Inc., et at. vs. 

4. That the receiver has had adequate time in which 
to file his accounting- since the termination of the receiver- 
ship, and that all the records necessary for the rendition 
of the account have been in the hands of the receiver dur- 
ing the continuance of the receivership and subsequent 
thereto. 

Wherefore, these defendants request this Honorable 
Court to deny the motion of the receiver for an extension 
of time in which to file his final report and respectfully 
request this Court to order the receiver to file his final 
account forthwith. 

MACFARLANE, SCHAEFER & HAUN 
By William Gamble 

Attorneys for Certain Defendants 

Copies of these objections have been served by mail upon 
the following persons : 

Newlin, Holley, Sandmeyer & Coleman, Attorneys for 
United West Coast Theatres Corporation, Twentieth Cen- 
tury-Fox and Charles P. Skouras. 

Loeb & Loeb, as Attorneys for Loew's, Inc. 

Mitchell, Silberberg & Knupp, as Attorneys for RKO- 
Radio Pictures, Inc. and Columbia Pictures Corp, 

Freston & Files, as Attorneys for Warner Bros. Pic- 
tures, Inc. 

O'Melveny & Myers, as Attorneys for Paramount Pic- 
tures, Inc. 

O'Connor & O'Connor, 530 West Sixth Street, Los An- 
geles 14, California, as Attorneys for Receiver, Frank 
Millan. 

WILLIAM GAMBLE 

[Endorsed]: Filed Aug. 6, 1948. Edmund L. Smith, 
Clerk. [369] 



United West Coast Theatres Corporation, et at. 69 
[Title of District Court and Cause] 

RECEIVER'S REPORT 

Comes now Frank Millan Receiver, for the Alto Theatre 
and Building, and makes the following report : 

Frank Millan was appointed Receiver to take charge of 
and operate the Alto Theatre Building and the Alto 
Theatre located at 8862 South Western Avenue in the 
City of Los Angeles, State of California ; that pursuant to 
such Order he did take charge and operated said subjects. 
By further order of Court the receivership was ordered 
terminated effective June 30, 1948. 

On July 1, 1947, the Alto Theatre Building was owned 
by South Side Theatres, Inc. The building contained the 
Alto Theatre and seven stores facing on Western Avenue. 
On July 1, 1947, the said stores in the building were rented 
from South Side Theatres, Inc., as follows: 

The store at 8864 South Western Avenue was leased 
by Mrs. [370] L. L. Logan and Mrs. R. V. Clark 
for a period of two years, commencing April 1, 

1947, and ending March 31, 1949; 

The store at 8866 South Western Avenue was leased 
by Ralph M. Nutt for a period of two years, com- 
mencing February 1, 1947, and ending January 31, 
1949; 

The store at 8868 South Western Avenue was leased 
by Katherine Tinder for a sixteen-months' period, 
beginning January 1, 1947, and ending on April 
30, 1948; 

The store at 8870 1 South Western Avenue was leased 
by D. J. Eller and Frank A. Bar so for a period of 
one year, commencing on the first day of February, 

1948, and ending the 31st day of January, 1949; 



70 South Side Theatres, Inc., et al. vs. 

The store at 8872 South Western Avenue was leased 
by Ray Bailey for a period of two years, com- 
mencing May 1, 1947, and ending April 30, 1949; 

The store located at 8874 South Western Avenue was 
leased by Catherine E. Scheppers for a period of 
one year, commencing May 1, 1947, and ending 
April 30, 1948; 

The store located at 8876 South Western Avenue was 
leased by Alexander Newfield and Alex Schrieber 
for a period of three years, commencing May 1, 
1945, and ending on the 30th day of April, 1948. 

During the course of the receivership, certain leases 
expired and in their place new ones were negotiated by 
the Receiver. They are as follows: 

On April 30, 1948, a one-year lease was entered into 
by the Receiver with Katherine Tinder for the 
same store located at 8868 South Western Avenue; 

On January 21, 1947, a lew lease was entered into 
by the Receiver with D. J. Eller and Frank A. 
Barso for a period of one year for the store located 
at 8870 South Western [371] Avenue; 

On the 15th day of April, 1948, a new lease was en- 
tered into with Catherine E. Scheppers for a period 
of one year for the store located at 8874 South 
Western Avenue; 

On January 30, 1948, a new lease was executed with 
Harry Isenberg and Mayer Levenstein for the store 
located at 8876 South Western Avenue for a period 
of two years, which lease commenced on July 1, 
1948. 



United West Coast Theatres Corporation, et al. 71 

No lease existed on July 1, 1947, nor was any there- 
after made for the space occupied in the building by the 
Alto Theatre. 

Copies of the existing leases and canceled leases are in 
the possession of the Receiver. 

The Projectionists at the theatre are members of Mov- 
ing Picture Projectionists Local No. 150 of the Inter- 
national Alliance of Theatrical Stage Employees and Mov- 
ing Picture Machine Operators of the United States and 
Canada. During the course of the receivership and in 
February, 1948, a wage scale and working agreement was 
executed between the said Union and the Receiver for a 
modified wage scale agreement, and payments have been 
made pursuant to the said agreement. A copy of this 
agreement is attached to the Report, marked Exhibit 1, 
and made a part hereof. 

On July 1, 1947, at the time the receivership commenced, 
all books and records and documents of account pertaining 
to the operation of the Theatre and the Building had been 
removed. There was no cash balance in the Bank; there 
was no operating account. All funds had been removed. 
All working data and schedules and information neces- 
sary £or operation had been removed. 

Operation of the Theatre was commenced on July 1, 
1947. The sum of $30.00 was borrowed from the Aca- 
demy Theatre in Inglewood for operating expenses. 
Candy for the confectionery stand, tickets and stationery 
were borrowed from Fox West Coast Agency Corporation. 
A picture was in the projection room which had been 
paid for, which picture was used for three days. The 
$30.00 was repaid the following day. [372] 



72 South Side Theatres, Inc., et at. vs. 

On July 1, 1947, a bank account was opened at the Bank 
of America National Trust and Savings Association, Man- 
chester and Vermont Branch, under the name of Frank 
Millan, Receiver for the Alto Theatre and Alto Theatre 
Building", with the arrangement that the checks were to 
be countersigned by the Fireman's Fund Indemnity Com- 
pany. 

All income received from the rentals of the stores and 
the operation of the Theatre was deposited in said bank 
account. 

Accounts showing the receipts per month were main- 
tained by the Receiver, which accounts show the gross 
amount received and deposited from the box office, the 
amount of admission tax deducted therefrom and the re- 
sulting box office net, which report shows, in addition, 
the overage or shortage on the monthly basis, the income 
from the sale of candy and confections in the Theatre 
and the income from leases referred to herein. Such state- 
ment also shows the monthly disbursements for advertis- 
ing, repairs, supplies, miscellaneous expense, express and 
drayage charges, telephone and telegraph, confectionery 
expenses, licenses and taxes, film rentals and salaries. A 
daily itemized statement of such items for the twelve- 
month period is attached hereto and marked Exhibit 2 
and made a part of this Report. 

The total income received by the Receiver from the 
operations of the Theatre and the Building for the twelve- 
month period during which the receivership operated 
was $175,024.57. 



United West Coast Theatres Corporation, et at. 73 

The total expenses for the same period from the opera- 
tion were $110,936.64 (including outstanding vouchers). 

The present amount of cash on deposit at the said Bank 
on August 19, 1948, was $63,949.34. 

Prior to the appointment of the Receiver the Alto 
Theatre and Alto Theatre Building was managed pur- 
suant to an agreement whereby the managing agency was 
paid 5 l A% of the gross income received from the Alto 
Theatre and from the Alto Theatre Building for the neces- 
sary services in conducting and operating the theatre busi- 
ness and the management of the Building, such services 
being purchasing film, renting film, booking film for dis- 
play, advertising present and future pictures, managing 
personnel, purchasing confectionery [373] supplies, pur- 
chasing necessary supplies for theatre operation and for 
the Building, maintenance of the theatre and Building, 
negotiation of leases for stores in the Building, maintain- 
ing adequate records of account showing receipts and dis- 
bursements, and such general services as are necessary for 
conducting and operating the business of a Theatre and a 
Building. 

The sum of $138.49, which amount represents the dif- 
ference between income and expenses and the amount of 
money on deposit in the Bank, is in the form of checks 
which are now outstanding and which should be cleared 
before the end of the month of August, 1948. 

During the period of the receivership, the Receiver 
has assumed and conducted the management service orig- 
inally handled pursuant to the agreement in return for 



74 South Side Theatres, Inc., et al. vs. 

the payment of S l A% referred to above. No payment has 
been made to the Receiver as a receivership fee or for 
such management work. 

During the course of the receivership, the Receiver has 
found it necessary to engage the services of an attorney 
and has engaged the services of O'Connor & O'Connor, 
at 530 West Sixth Street in the City of Los Angeles, 
California, which appointment was approved by Order 
of the Court. No payment has been made for attorneys' 
fees in connection with this receivership. 

An additional amount of $138.49 is in the form of out- 
standing vouchers which should clear the bank by the 
end of the month of August. Upon the clearing and ac- 
counting of this amount, the account of the receivership 
will be complete pending a petition for receiver's fees 
for administration and for attorneys' fees. The final ac- 
counting for the said amount of $138.49 will be presented 
to the Court as soon after the first of September, 1948, as 
the vouchers are cleared and paid. 

No income tax return either for the Federal Govern- 
ment or for the State Government has been prepared by 
the Receiver and no tax paid on income received from 
the operations of this receivership. Regulations 111, Sec- 
tion 29.52-2, in part, provides that a Receiver in charge 
of only a part of the property of a corporation need not 
make a return of income. It has been the Receiver's posi- 
tion that the property of the receivership is only a part 
of the property of one of the corporations having an in- 
terest in it, and that such [374 J corporation has filed 



United W est Coast Tlie aires Corporation, et al. 75 

and included in its return the income during the receiver- 
ship. In the event that such income has not been in- 
cluded in the return of the corporation owning the inter- 
est in the receivership, it will be necessary for the Re- 
ceiver to prepare and file an income tax return for the 
fiscal year in which the properties were operated by the 
receivership. Such return is due on September 15, 1948. 
In the event that the income of the receivership has not 
been included on the returns of the corporation owning 
the property, it will be necessary for the Receiver to pay 
such tax. 

No rent has been paid during the course of the receiver- 
ship for the space occupied by the Theatre, as the Receiver, 
being the Receiver for the Building, such rents would be 
payable to him. 

Dated this 19th day of August, 1948. 

FRANK MILLAN 

Receiver 

O'CONNOR & O'CONNOR 
By Edward J. O'Connor 

Attorneys for Frank Millan, Receiver [375] 



[Affidavit of Service by Mail.] 

| Endorsed] : Filed Aug. 20, 1948. Edmund L. Smith, 
Clerk. [395] 



76 South Side Theatres, Inc., et al. vs. 

[Title of District Court and Cause] 

RECEIVER'S FINAL REPORT 

Comes now Frank Millan, Receiver for the Alto Theatre 
and Alto Theatre Building and makes this, his Final Re- 
port for the operation of the Alto Theatre and Alto 
Theatre Building located at 8862 South Western Avenue 
in the City of Los Angeles, State of California. Pursuant 
to Order of Court dated July 1, 1947, the Receiver 
operated the said Theatre and operated the said Building 
for the period from July 1, 1947, to and including the 
30th day of June, 1948. The said receivership was ter- 
minated by Order of Court on June 30, 1948. 

On August 19, 1948, a report of receivership proceed- 
ings for the said properties was filed by this Receiver, 
which Report is referred to and included as part of this 
Report by reference. Some changes are made in Ex- 
hibit 2 of the said Report, which are specifically set forth 
herein. Except as modified by this, the Final Report, the 
earlier report of August 19, 1948, is to be [396] con- 
sidered as part of this, the Final Report. 

The total gross receipts during the said period were 
$175,746.58. 

The gross expenses during the said period were 
$112,461.13. 

The net profit is $63,285.45. 

The present bank balance is $63,439.34. 

The difference between the bank balance and net profit 
is $153.89. 

During the one-year period of operation by the Receiver, 
the net profit from the operation of the Theatre and 
Building was $63,285.45. 



United West Coast Theatres Corporation, et al. 77 

There is a difference between the present bank balance 
and the net profit of $153.89. This difference is made up 
of checks outstanding in the amount of $126.42, plus a 
$25.00 unaccounted for item on rental receipts. Included 
in this item is miscellaneous revenue acquired after the 
close of the receivership in the amount of $203.53. 

The sum of $63,285.45 is available for distribution. It 
is requested that from this amount be withdrawn a rea- 
sonable Receiver's fee and reasonable Attorneys' fee. 

The separate items comprising gross receipts are as 
follows : 

Box Office deposits $151,188.83 

Candy income 15,668.28 

Miscellaneous income 414.47 



$175,746.58 



The separate items comprising total expenses are as 
follows : 

Advertising 2,325.26 

Repairs 2,570.96 

Supplies 1,679.57 

Miscellaneous 450.66 

Exp. and Dray. Expense 526.90 

Tele, and Tel 308.58 

Other expenses 6,705.40 

License 286.15 

County tax 2,735.79 

Film 34,008.51 



(Carried Forward) $ 51,597.78 [397] 



78 South Side Theatres, Inc., et al. vs. 

(Brought Forward) $ 51,59778 

L. H. P 1705.53 

Admission tax 23,386.25 

Candy cost 9,468.53 

Candy tax 307.87 

Emp. taxes 2,10574 

Donations 50.00 

Salaries 18,319.38 

Expense after June 30 5,520.05 

Total $112,461.13 

Since the filing of the First Report, certain reconciliation 
figures and adjustments are applied to Exhibit 2, which 
are as follows: 

Sunday, July 6, 1947 

Box Office Deposit— Change from $403.05 to $403.14 

Saturday, July 19 

Box Office Deposit— Change from $614.94 to $615.19 

Thursday, July 24 

Box Office Deposit— Change from $211.83 to $211.31 

Total $11,677.51 $11,677.60 

Wednesday, September 3, 1947 

Box Office Deposit— Change from $195.35 to $193.35 
Change Overage from 30 cents short to $2.30 short 
Box Office Deposit Total— Change from $12,914.17 
to $12,912.17 

Total Box Office Shortage — Change from $6.78 to 
$878 



United West Coast Theatres Corporation, et al. 79 

Wednesday, October 1, 1947 
Eliminate candy — $32.00 
Total candy deposit — Change from $1,336.00 to 

$1,304.00 
Repairs— Change from $25.23 to $45.31 
Supplies— Change from $109.74 to $89.66 

December 11 

Change Candy— Insert $100.00 

Change Candy total from $1,184.69 to $1,284.69 [398] 

Wednesday, December 31, 1947 

Total Candy Deposit— Change from $67.00 to $32.69 
Box Office Deposit Total— Change from $1,096.00 to 
$1,084.69 

December 15 

Other Deposits: Insert $100.00 
Total should be $826.10 

Saturday, January, 1948 

Candy Deposit— Change from $125.00 to $100.00 
Eliminate $100.00 deposit 

Other Deposits— Change from $925.00 to $825.00 
Total Candy Deposit — Change from $1,556.00 to 
$1,531.00 

April 

Shortage— Change from $753.00 to $653.00 
Miscellaneous Expenses — Change from $43.36 to 
$58.80 

May 

Total Box Office Deposit— Change from $14,570.71 

to $14,570.70 
Other Expenses— Change from $400.00 to $500.00 
Films— Change from $2,721.00 to $2,621.00 



80 South Side Theatres, Inc., et al. vs. 

May 30, 1948 

Total Box Office Deposit— Change from $625.00 to 
$500.00 
June 5, 1948 

Candy Deposit— Change from $82.00 to $72.00 
June 23, 1948 

Other Deposit— Add $67.00 
Friday, June 25, 1948 

Candy Deposit — Eliminate $21.00 
Saturday, June 26, 1948 

Candy Deposit— Change from $90.00 to $40.00 
Candy Deposit Total— Change from $1,024.00 to 
$1,010.00 
Advertising— Change from $151.50 to $151.05 

The Alto Theatre and Alto Theatre Building have been 
turned over by the Receiver and are no longer in his pos- 
session, said properties at present being [399] occupied 
by South Side Theatres, Inc. 

Prior to the date of the receivership, the said Theatre 
and Building were managed and operated for five and 
one-quarter per cent (5^4%) of the total box office gross, 
candy profit, subrentals and miscellaneous deposits, which 
for the present year total $134,641.63. For the operation 
under said basis for said year the operation cost would be 
$7,068.69. From the sum of $7,068.69 regularly allowed 
for expense of operation, it is respectfully requested that 
the Receiver's fee be allowed in the amount of $4,000.00 
and that the Attorneys' fee be allowed in the amount of 
$2,000.00. 

Additional examination has been made by the attorney 
for the Receiver in cooperation with tax counsel for in- 
terested defendants. Upon a thorough examination of the 
applicable tax law, it is concluded that this Receiver should 
not file a tax return, for the reason that he is a Receiver 



United West Coast Theatres Corporation, et al. 81 

for only a part of the property of another entity, and as 
such is not required to file Federal or State income tax 
returns and, consequently, no income tax, either Federal 
or State, will be paid upon the said accumulated income. 
It is the Receiver's position that such income will con- 
stitute taxable income to the entity to which it belonged 
and to which this fund will be disbursed. 

A copy of this Report is being forwarded to each one 
of the parties plaintiff and defendant, by giving a copy to 
their respective counsel. It is requested that a date be set 
within which to file any objections to the said Report and 
a further date for hearing on such objections, if any; that 
as soon thereafter as is satisfactory to the Court the Re- 
ceiver's account be approved; that a Receiver's fee in the 
amount of $4,000.00 and Attorneys' fee in the amount of 
$2,000.00 be allowed and such amounts paid from the said 
sum of $63,285.45; and that the balance be disbursed and 
the Receiver discharged. 

No party plaintiff or defendant to this action would 
accept the return of the Theatre and Building on the 
termination of the receivership, and the Receiver is ad- 
vised that no party will accept the income accumulated and 
referred to herein; and the Receiver requests that unless 
the claimant of such accumulated income be established or 
recognized, the said income be disbursed [400] by the 
Receiver to the Clerk of the Court. 

Dated this 16th day of September, 1948. 

FRANK MILLAN 
O'CONNOR & O'CONNOR Receiver 

By Edward J. O'Connor 

Attorneys for Frank Millan, Receiver [401] 

[Affidavit of Service by Mail] 

[Endorsed]: Filed Sep. 17, 1948. Edmund L. Smith, 
Clerk. [402] 



82 South Side Theatres, Inc., et al. vs. 

[Title of District Court and Cause] 

OBJECTIONS TO RECEIVER'S FINAL REPORT 

Now Come the defendants South Side Theatres, Inc., 
Marco Wolff, Fanchon Simon, Roy N. Wolff and Rube 
Wolff, and file their objections to receiver's final report 
heretofore made by receiver pursuant to order of Court 
terminating said receivership. 

The report of the receiver insofar as the items are 
specified has been audited by the defendants and is found 
to be in order except for the item of expense after June 
30, 1948, which has not been itemized and from which it 
cannot be determined what expenditures were made to 
constitute the sum of $5,520.05. A complete account 
showing the item of expenses totalling this sum should be 
submitted. There is also the item of petty cash in the 
approximate sum of $100.00 which has not been accounted 
for and should be included [403] in the account. 

Further objection is made to the report in that it does 
not include any receipts from the sale of popcorn from 
the popcorn machine located on the premises nor does it 
include any receipts received from the sale of soft drinks 
from the coca cola vending machine. Both of said vend- 
ing machines were operated prior to the receivership and 
were taken over by the receiver as part of the property 
to be held and accounted for by him. 

There is a further discrepancy in the sales from the 
candy concession in that the receiver has not accounted 
for 5% of the profits received from said concession. It 



United West Coast Theatres Corporation, et al. S>3 

was determined from an audit of the records of the re- 
ceiver that from the cost of the candy the receipts as 
shown were approximately 5% under the receipts which 
should have been accounted for by the receiver from the 
sale of the candy purchased. 

All of the items hereinabove set forth which have not 
been accounted for were receipts from property which 
was under the control of the receiver and which was taken 
over by the receiver as part of the assets of the Alto The- 
atre and should be included in the account and the pro- 
ceeds therefrom turned over to the distributee upon the 
termination of the receivership. 

r 

Defendants further object to the compensation re- 
quested to be allowed for the receiver. Subsequent to the 
appointment of the receiver there was allowed by the 
Court the sum of $100.00 per week as compensation for 
the receiver which during the total year of operation would 
amount to $5,200.00 which has been paid by the receiver 
and deducted in the account under expenses. There was 
further compensation to the receiver in the amount of 
$400.00 as a Christmas bonus which was also deducted 
from the account. At the time of the appointment of the 
receiver he was operating the theatre as a manager and 
received compensation therefor in the sum of $65.00 per 
week and other emoluments which brought the total to 
approximately $100.00 per [404] week and it was upon 
this basis that the sum of $100.00 per week was fixed by 
the Court to determine the compensation which would be 
just for the receiver during his operation. The services 



84 South Side Theatres, Inc., et al. vs. 

performed by the receiver did not entail any further bur- 
den upon him other than those normally incident to the 
operation of the theatre and the compensation fixed by 
the Court amply provided for a just return for the services 
rendered by the receiver. There is no showing of un- 
usual services rendered by the receiver which would war- 
rant the additional payment to him of $4,000.00 as com- 
pensation during the operation of the receivership. 

Defendants further object to the item of $2,000.00 as 
compensation for the attorney for the receiver. At the 
time the Court appointed the attorney for the receiver, he 
stated that it was the purpose of having available for the 
receiver competent legal advice. However, it was express- 
ly understood that the attorneys fees were to be nominal. 
The attorneys for the receiver were appointed some time 
after the receiver's appointment and it is believed that 
the sum of $2,000.00 as attorney's fees is excessive. These 
defendants further object to the payment by them of any 
attorney's fees for the receiver as the receiver was ap- 
pointed at the request of the plaintiffs and served no useful 
or beneficial purpose to these defendants. Therefore, if 
any attorney's fees are allowed, it is submitted that the 
same should be paid by the plaintiffs procuring the ap- 
pointment and not deducted from the receipts in the hands 
of the receiver available for distribution. 

Wherefore, defendants pray that upon a hearing of 
these objections the Court order the receiver to account 
for the initial items specified in these objections and the 
Court deny the receiver additional compensation as set 



United West Coast Theatres Corporation, et al. 85 

forth in his report and further that the Court determine 
the amount of the compensation to be paid to the receiver's 
attorneys and that the same be fixed at a reasonable sum. 

Dated: October 1, 1948. [405] 

MACFARLANE, SCHAEFER & HAUN 
By William Gamble 

Attorneys for Defendants 

Copies of these objections have been served by mail 
upon the following persons: 

Newlin, Holley, Sandmeyer & Coleman, Attorneys for 
West Coast Theatres Corporation, Twentieth Century- 
Fox and Charles P. Skouras. 

Loeb & Loeb, as Attorneys for Loew's Inc. 

Mitchell, Silberberg & Knupp, as Attorneys for RKO- 
Radio Pictures, Inc. and Columbia Pictures Corp. 

Freston & Files, as Attorneys for Warner Bros. Pic- 
tures, Inc. 

O'Melveny & Myers, as Attorneys for Paramount Pic- 
tures, Inc. 

O'Connor & O'Connor, 530 West Sixth Street, Los 
Angeles 14, California, as Attorneys for Receiver, Frank 
Millan. 

WILLIAM GAMBLE 

[Endorsed] : Filed Oct. 6, 1948. Edmund L. Smith, 
Clerk. [406] 



86 South Side Theatres, Inc., et al. vs. 

[Title of District Court and Cause] 

REPLY TO OBJECTIONS TO RECEIVER'S FINAL 

REPORT 

Comes Now the Receiver, Frank Millan, and in reply to 
request for additional information, contained in the Ob- 
jections to Receiver's Final Report filed by South Side 
Theatres, Inc., Marco Wolff, Fanchon Simon, Roy N. 
Wolff, and Rube Wolff, through their attorneys, Mac- 
Farlane, Schaefer & Haun, and states that the material 
objected to is contained in the Final Report, but is more 
specifically enlarged upon herein. 

I. 

A detailed statement of the items of expenses paid after 
June 30, 1948, in the total sum of $5,520.05 is as follows: 

Payment of advertising costs incurred 

prior to June 30, 1948 $ 52.83 [408] 

Payment of film rental, incurred prior 

to June 30, 1948 1,389.31 

Payment of repairs, incurred prior to 

June 30, 1948 35.38 

Payment of express and drayage costs 
for film delivery and rubbish dis- 
posal, incurred prior to June 30, 1948 26.48 

Miscellaneous expenses, including bank 
messenger, Electro Sun Photostats 
and O'Connor & O'Connor for 
photostatic copies used in reports 
and detective service, incurred prior 
to June 30, 1948 103.77 



United West Coast Theatres Corporation, et al. 87 

Salaries for services rendered in July 

for termination activities $ 450.00 

Rebate on insurance to Fox West Coast 

for building insurance payments 

for insurance prior to June 30, 1948 180.81 

Gas 3.23 

May, 1948 Sales Tax 25.38 

Candy purchased prior to June 30, 1948 348.14 

June, 1948 Sales Tax 20.87 [409] 

Candy concession City Tax for quarter 

ending June 30, 1948 13.39 

June, 1948 Admission Tax 2,034.96 

Withholding Tax for quarter ending 

June 30, 1948 425.25 

Employees' Franchise Tax for quarter 

ending June 30, 1948 80.96 

Social Security Tax (Unemployment) 

for period ending June 30, 1948 28.65 

Social Security Tax (Old Age Benefits) 

for period ending June 30, 1948 149.79 

Receivership bond premium, incurred 

prior to June 30, 1948 50.00 

Supplies for projection room, secured 

before June 30, 1948 55.82 

Telephone expense prior to June 30, 1948 45.03 

Total $5,520.05 

II. 

Petty Cash (approximately) $ 100.00 

The item above referred to, which was objected to in 
said objections, was deposited in the bank on July 15, 



88 South Side Theatres, Inc., et al. vs. 

1948 and is listed as Miscellaneous Revenue in the Final 
Report. Deposit slips denoting- such entry are in [410] 
the Receiver's records and available for examination. 

III. 

The objectors are in error in concluding that the re- 
ceipts from popcorn and from the popcorn machine are 
not included in the receipts. Exhibit 2 of the Receiver's 
Report, listing the candy deposits, includes popcorn in 
the candy deposits as is the regular practice in the opera- 
tion of this portion of the theatre business. 

IV. 

The objectors erred in concluding that the receipts from 
the sale of soft drinks from the Coca-Cola vending ma- 
chine were not included. Such receipts were included 
under Miscellaneous Revenue. The bank slips designating 
deposits state such deposits are for Coca-Cola Revenue. 

V. 

The objectors erred in concluding that the Receiver has 
not accounted for 5% of the profits received from the 
candy concession. Prior to filing the Objections, Roy N. 
Wolff, one of the objectors, advised the Receiver that 
approximately 5% of the popcorn could be saved by not 
filling the 5 cents and 10 cents bags to normal capacity. 
The Receiver's statement of cost for the candy concession 
and revenue received is an accurate and complete state- 
ment of the profits realizes from the candy concession. 

VI. 

In connection with the Receiver's fee and the attorneys' 
fee, it is pointed out that they total $6,000.00, which is a 
low and reasonable expense for administration and man- 
agement of the Theatre and building; that during the 



United West Coast Theatres Corporation, et al. 89 

normal operation of the Theatre and building the ob- 
jectors, under their existing agreement, would pay $7,- 
068.69 for such services; that the fee requested for serv- 
ices rendered by the Receiver and attorneys' fees is 
$1,065.69 less than it was agreed to pay under the terms 
of the agreement for the operation of the Theatre and 
building. 

VII. 

All of the books, vouchers, bank deposit slips, bank 
statements and all records pertaining to the operation of 
the said Receivership are now in [411] the possession of 
the Receiver and are open for inspection and review to 
anyone having an interest in the said Receivership and the 
same will be made readily available. 

It is respectfully requested that the account be approved 
as stated and that the Receiver's fees and attorneys' fees 
be considered reasonable and allowed as stated and that 
the specific items referred to in the Objections have been 
accurately accounted for. 

Dated this 11th day of October, 1948 at Los Angeles, 
California. 

FRANK MILLAN 

Receiver 

O'CONNOR & O'CONNOR 
By Edward J. O'Connor 

Attorneys for Frank Millan, Receiver [412] 

[Affidavit of Service by Mail.] 

[Endorsed] : Filed Oct. 12, 1948. Edmund L. Smith, 
Clerk. [413] 



90 South Side Theatres, Inc., et al. vs. 

In the District Court of the United States in and for the 
Southern District of California 
Central Division 
Civil Action No. 7282-BH 
UNITED WEST COAST THEATRES CORPORA- 
TION, et al., 

Plaintiff 
v. 
SOUTH SIDE THEATRES, INC., et al., 

Defendants 
TWENTIETH CENTURY-FOX FILM CORPORA- 
TION, et al., 

Third Party Defendants 

ORDER 

This cause came on for hearing October 25, 1948, pur- 
suant to notice duly served on all of the interested parties. 
There were present in Court Russell Hardy, appearing as 
counsel for South Side Theatres, Inc., Paul O. Sandmeyer 
and Frank R. Johnston, appearing as counsel for United 
West Coast Theatres Corporation, Edward J. O'Connor, 
appearing as counsel for Frank Millan, Receiver of the 
Alto Theatre and Alto Theatre Building, and the Court 
having heard the testimony and having examined the 
proofs offered by the respective parties and being fully 
advised in the premises, finds that the Receiver's Final 
Account accurately and correctly accounts for all moneys 
coming into his possession; that the Receiver has fully 
obeyed the orders of Court to him issued and has fully 
accounted for all moneys coming into his hands as [414] 
Receiver; that legal services have been rendered by the 
attorney for the said receivership; that the ownership of 
the net income is subject to dispute between the parties; 
that all of the receivership property, except the cash in 
the bank, has been deposited with the Clerk of this Court. 



United West Coast Theatres Corporation, et al. 91 

It Is, Therefore, Ordered that the Receiver's Final Ac- 
count accounts for all of the money and disbursements dur- 
ing the course of the receivership and the same is hereby 
approved. 

It Is Further Ordered that the sum of $63,262.92 be 
deposited with the Clerk of this Court, less the sum al- 
lowed as a Receiver's fee, and as an Attorneys' fee, such 

order [TBI 
sum to be held by the Clerk pending further audit of the 
Court. 

It Is Further Ordered that from the said sum be paid 
as Receiver's fee to the Receiver, Frank Millan, the amount 
of Two thousand ($2000.00). 

It Is Further Ordered that from the said sum be paid 
to the attorneys for the said Receiver, O'Connor and 
O'Connor, the sum of Two thousand ($2000.00). 

It Is Further Ordered that the Receiver be discharged 
from the said receivership and from all authority and lia- 
bility in connection with the said receivership, and that he 
be forever discharged from any personal or other liability 
in connection with the said receivership. 

It Is Further Ordered that the bond given and filed for 
faithful discharge of the Receiver's duties, which bond is 
in the amount of $50,000.00, be and the same is hereby 
vacated, nullified and canceled. 

Dated this 22 day of November, 1948. 

BEN HARRISON 

United States District Judge 

Judgment entered Nov. 22, 1948. Docketed Nov. 22, 
1948, J. Book 55, page 413. Edmund L. Smith, Clerk; by 
Theodore Hocke, Deputy. 

[Endorsed]: Filed Nov.. 22, 1948. Edmund L. Smith, 
Clerk. [415] 



92 South Side Theatres, Inc., et al. vs. 

[Title of District Court and Cause] 

NOTICE OF APPEAL 

Notice Is Hereby Given that South Side Theatres, Inc. 
and Marco Wolff, Fanchon Simon, Roy N. Wolff and 
Rube Wolff, joint venturers, doing business under the 
name of South Side Associates, defendants above named, 
hereby appeal to the United States Court of Appeals for 
the Ninth Circuit from the order approving the final ac- 
count of the Receiver appointed in the above entitled 
matter and allowing Receiver's fees, Attorney's fees for 
the attorney for the Receiver, entered in this action on No- 
vember 22, 1948. 

Dated: December 16, 1948. 

MACFARLANE, SCHAEFER & HAUN 
HENRY SCHAEFER, JR. 
WILLIAM P. GAMBLE 
JAMES H. ARTHUR 

By William Gamble 

Attorneys for Defendants 

RUSSELL HARDY 
Of Counsel [416] 

Parties to be served: 

Newlin, Holley, Sandmeyer & Coleman, Attys. for 
United West Coast, Twentieth Century-Fox and Skouras 
601 West Fifth Street, Los Angeles 

Loeb & Loeb, Attys. for Loew's, Inc., 523 West Sixth 
Street, Los Angeles 



United West Coast Theatres Corporation, et al. 93 

Mitchell, Silberberg & Knupp, Attys. for RKO, and 
Columbia Pictures, 727 West Seventh Street, Los An- 
geles 

Freston & Files, Attys. for Warner Bros., 650 South 
Spring St., Los Angeles 

O'Melveny & Myers, Attys. for Paramount, 433 South 
Spring Street, Los Angeles 

O'Connor & O'Connor, Attys. for Receiver, 530 West 
Sixth Street, Los Angeles 

Mailed copies Notice of Appeal 12-21-48 

[Endorsed] : See list attached of parties to be served. 
Filed Dec. 21, 1948. Edmund L. Smith, Clerk. [417] 



[Title of District Court and Cause] 

CERTIFICATE OF CLERK 

I, Edmund L. Smith, Clerk of the United States Dis- 
trict Court for the Southern District of California, do 
hereby certify that the foregoing pages numbered from 1 
to 426, inclusive, contain the original Complaint for Dec- 
laratory Relief; Order to Show Cause and Appointment 
of Temporary Receiver; Return to Order to Show Cause 
and Exhibits 1 to 12, thereto; Order to Show Cause filed 
June 3, 1948; Order Allowing Temporary Receiver Interim 
Compensation ; Notice of Motion to Dismiss and to Sum- 
mon the United States of America as a Party; Wage 



94 South Side Theatres, Inc., et al. vs. 

Agreement Approval; Objections to Motion of Receiver, 
Frank Millan; Receiver's Report; Receiver's Final Re- 
port; Objections to Receiver's Final Report; Notice of 
Hearing on Objections to Receiver's Final Report; Reply 
to Objections to Receiver's Final Report; Order filed 
November 22, 1948; Notice of Appeal; Statement of 
Points on Which Appellants Intend to Rely on the Ap- 
peal ; Appellant's Designation of Contents of Record on 
Appeal; Appellee's Designation of Further Records on 
Appeal and Appellees' Designation of Contents of Record 
on Appeal which, together with Reporter's Transcripts of 
Proceedings on July 7, 1947, September 10 and 12, 1947, 
January 26, October 25 and November 22, 1948, trans- 
mitted herewith, constitute the record on appeal to the 
United States Court of Appeals for the Ninth Circuit. 

I further certify that my fees for preparing, comparing, 
correcting and certifying the foregoing record amount to 
$1.60 which sum has been paid to me by appellants. 

Witness my hand and the seal of said District Court this 
27 day of January, A. D. 1949. 

(Seal) EDMUND L. SMITH 

Clerk 

By Theodore Hocke 

Chief Deputy 



United West Coast Theatres Corporation, et al. 95 
[Title of District Court and Cause] 

Honorable Ben Harrison, Judge Presiding 
REPORTER'S TRANSCRIPT OF PROCEEDINGS 
Los Angeles, California, Monday, July 7th, 1947 
Appearances : 

For the Plaintiffs: Messrs. Loeb & Loeb, by Ben- 
jamin F. Schwartz, Esquire. 

For the Defendants: William Gamble, Esquire. 

Los Angeles, California, Monday, July 7th, 1947 
10:00 A. M. 

The Court: You may call the calendar. 

The Clerk: 7282, United West Coast Theatres and 
others versus South Side Theatres and others. 

Mr. Gamble: The defendant is ready. 

Mr. Schwartz: Plaintiff is ready. 

Mr. Gamble: We request a continuance to, I think, 
August 4th. 

The Court: The court will be dark all during the 
month of August, counsel. 

Mr. Gamble: What would be the earliest date con- 
venient to the court? Would it be in September? 

The Court: It will be really the second Monday in 
September. Either the second Monday in September or 
July 28th. 

Mr. Gamble: The reason for the request for a con- 
tinuance is because eastern counsel has been handling this 
matter. 

The Court: I am not questioning that, counsel. 



96 South Side Theatres, Inc., et al. vs. 

Mr. Gamble: We would like to have time to try — 
Loeb & Loeb suggested we get together and perhaps it 
would be better for a September date. 

The Court: Very well, it will be continued until Sep- 
tember 8th. Do you consent to the interim receiver re- 
maining in charge? 

Mr. Gamble: Yes, pending the hearing on the order 
to show [2*] cause? 

The Court: Yes. 

Mr. Schwartz: Your Honor, there is a question came 
up concerning the propriety of the receiver here having 
counsel. We rather feel he should employ his own counsel 
if that is all right. 

The Court: Counsel, I don't know the receiver, of 
course. I appointed a man that was manager because I 
figured that would reduce the expense. I am not trying 
to make any work for lawyers out of this. I am trying 
to hold the expense down. I put a receiver in because the 
place was not going to open that night and I felt that it 
was necessary to open. I do not see why until after Sep- 
tember 8th, the receiver needs an attorney. T am not 
trying to make work for lawyers out of this. 

Mr. Schwartz: I am sure, your Honor — 

The Court: Your principal difficulty is over the de- 
cree and two pieces of property. That is the issue and 
your real problem and if the receiver needs an attorney 
to manage this theatre — do theatre managers ordinarily 
have attorneys to advise them? 

Mr. Schwartz: No, except in this case there are cer- 
tain matters that come up in which he might need legal 
advice and we do not feel we want to represent him too. 

*Page number appearing in original Reporter's Transcript. 



United West Coast Theatres Corporation, et at. 97 

For example, there are such matters as licenses to be taken 
care of; his fees to [3] be set and determined and things 
of that sort. 

The Court: He will continue to get his salary, will 
he not, as manager? 

Mr. Schwartz: That is all subject to your Honor's 
approval. He is no longer manager now — he is the re- 
ceiver. 

The Court : That is true but he is acting in the capacity 
of manager. 

Mr. Schwartz: That is true. I merely make the sug- 
gestion. The Court: The only thing is I want some- 
thing left out of this proposition when it is over. I do 
not want the theatre to be broke. I would like to have 
something left. Now, if he needs an attorney for — 

Mr. Schwartz: We are willing to handle any legal 
matter such as may come up from time to time for him. 

The Court: Have you any objection to that? 

Mr. Gamble: I have no objection except it seems to 
me actually there will be nothing coming up that he has 
not been able to handle in the past. 

The Court : He has to be paid. He has to petition the 
court for allowance for his pay. 

Mr. Gamble: At that time wouldn't the court be able 
to— 

The Court : He cannot go until September 8th without 
money unless he is rich like lawyers. I will make an 
allowance for his regular salary. You prepare an order 



98 South Side Theatres, Inc., et al. vs. 

for his regular salary that he has been receiving as 
manager which [4] will apply on the account and when 
the matter is over I will fix any additional fee as receiver 
that is proper, but I would like to hold the expense down. 

Mr. Schwartz: We agree with your Honor on that 
point except we do not want to be placed in the position 
of representing the plaintiff and the receiver both. 

The Court: If there are any matters that arise you 
and counsel should get together and discuss them as a 
matter of mutual interest. 

Mr. Schwartz: I feel that can be done. 

Mr. Gamble: That is fine. 

The Court: Then you can charge the expense to your 
client. They have a lot of money. 

(Whereupon the above proceedings were concluded). 

[Endorsed] : Filed Jan. 27, 1949. Edmund L. Smith, 
Clerk. [5] 



United West Coast Theatres Corporation, et al. 99 
[Title of District Court and Cause] 

Honorable Ben Harrison, Judge Presiding 
REPORTER'S TRANSCRIPT OF PROCEEDINGS 
Los Angeles, California, Wednesday, September 10, 1947 
Appearances : 

For the Plaintiffs: Loeb & Loeb, by Morris Pfaelzer, 
Esquire. 

For the Defendants: MaeFarlane, Schaefer & Haun, 
by Henry Schaefer, Jr., Esq. 

Los Angeles, California, Wed., September 10, 1947 

10:00 A. M. 

The Court: You may call the case, Mr. Clerk. 

The Clerk: United West Coast Theatres Corporation, 
et al. vs. South Side Theatres, et al., No. 7282-BH. 

Mr. Pfaelzer : The plaintiff is ready. 

Mr. Schaefer: The defendant is ready. 

The Court: Gentlemen, with reference to the motion 
in the case of United West Coast Theatres Corporation, 
No. 7282, it is not going to be possible to reach that today. 
When I set the case I indicated it might go over. 

Mr. Schwartz called me this morning with reference 
to it. As I understand, the case set for Friday is not 
going to be tried. I am quite sure that I can hear this 
matter at 10:00 o'clock Friday morning. 

Mr. Pfaelzer: That is satisfactory, your Honor. That 
is quite satisfactory to us. 

Mr. Schaefer: That is satisfactory to us, your Honor. 

The Court: This matter will be continued until that 
time. 



100 South Side Theatres, Inc., et al. vs. 

Mr. Schaefer: May I at this time, your Honor, move 
the admission of Mr. Russell Hardy of Washington, D. 
C, a member of the bar of Washington, D. C. and the 
Supreme Court of the United States, for the purpose of 
this case only. 

The Court: You may take your order. [2] 

There is one question that I would like to have both 
sides prepare themselves to argue. I am referring to the 
motion to dismiss and the motion for the United States 
to be summoned as a party. 

After studying the pleadings and the agreement there 
arose in the court's mind a very serious question as to 
whether this court has any jurisdiction due to the fact 
that it involves two California corporations that are at- 
tempting to terminate a joint venture agreement by rea- 
son of this New York decree, but that is one of the con- 
tingencies in the agreement. That is, if the Attorney 
General or some decree, either consent or otherwise, ter- 
minates it. But there is a very serious question in the 
court's mind whether when you boil this case down if it 
isn't an action to terminate a joint venture by reason of 
the agreement between the parties. 

If that is true then this court has no jurisdiction what- 
soever and I would like to have counsel be prepared to 
argue that joint. 

It has not been directly raised as yet but if I haven't 
jurisdiction I haven't, and that is all. 

Mr. Pfaelzer : Of course, we believe you have. There 
is a Federal question involved. 

The Court: T realize the plaintiff has proceeded on 
the theory that this involves the Anti-Trust Act and being 
a statute of the United States it involves the law of the 
[3] United States, but it seems to me that it is a pretty 



United West Coast Theatres Corporation, et al. 101 

close question of whether that isn't incidental to the joint 
venture and one of the contingencies upon which the joint 
venture can be terminated. 

If that is true it may be that this court hasn't any 
jurisdiction and you will have to start your action over 
again in the state court. I think counsel should be pre- 
pared to argue that feature of the case. 

Mr. Pfaelzer: We have cited no authorities on that 
proposition. 

The Court: I realize that. 

Mr. Pfaelzer: So we ask leave to file further authori- 
ties. 

The Court: I am giving both of you gentlemen an 
opportunity to present anything that you want to either in 
the way of authorities or in the way of argument. Of 
course I prefer something that I can read rather than 
listen to an argument, but the time is short. I have spent 
considerable time on that phase of the matter myself and 
if the court hasn't jurisdiction then you people are going 
to have to get together to the extent, at least, that this 
theatre will not be closed. 

Mr. Pfaelzer: I would like to see — 

The Court: I can say some arrangement should be 
made for the continuance of this theatre, if this court 
hasn't [4] jurisdiction, either by filing another action in 
the state court under your agreement of termination. 

You gentlemen may have all the answers and I may be 
entirely wrong in giving any consideration to that angle 
but I have almost convinced myself already to the effect 
that T haven't jurisdiction, so somebody is going to have 
to convince me that I do have jurisdiction of the action. 
If I haven't jurisdiction then you gentlemen are going to 



102 South Side Theatres, Inc., et al. vs. 

have to get together and arrange for the continuance of 
this theatre because it would be a shame to have a business 
wrecked. You can do it either by mutual agreement or 
by filing a new action in the state court and ask for the 
appointment of a receiver in that jurisdiction. 

I am just making those comments at this time so you 
will be advised as to what the court has in mind. I am 
not making any ruling but giving you some of the things 
that the court has been thinking about so you may be 
prepared to meet them. 

Mr. Schaefer: Very well, your Honor. At 10:00 
o'clock Friday, your Honor? 

The Court: Yes. [5] 



Appearances : 

For the Plaintiff: Loeb & Loeb, by Benjamin F. 
Schwartz, Esq., and Morris Pfaelzer, Esq. 

For the Defendants: MacFarlane, Schaefer & Haun, 
and Henry Gamble, Esq., by Russell Hardy, Esq. and 
Henry Schaefer, Jr., Esq. 

Los Angeles, California, Friday, Sept. 12, 1947 
10:00 A. M. 

The Court: Call the case, Mr. Clerk. 

The Clerk: Case No. 7282-BH, United West Coast 
Theatres Corporation and others, versus South Side 
Theatres, et al. 

Mr. Schwartz: Ready for the plaintiff, your Honor. 

Mr. Schaefer: The defendants are ready. 



United West Coast Theatres Corporation, et al. 103 

The Court: Gentlemen, I want to first hear discussion 
on the question of whether this court has any jurisdiction 
in this case. 

Mr. Schwartz: I understood, your Honor, that the 
last time the attorneys were before the court it wanted to 
hear the plaintiff on that question, namely, the jurisdiction 
of this court. 

I should like to state first, that I understand we are 
talking now about the jurisdiction of the court and not 
about the venue, and I would like to address my remarks 
to the court only on that point, namely, whether this court 
has jurisdiction and not whether the case should have 
been brought in New York or anywhere else. 

The Court: The point I have in mind is whether this 
case should not have been brought in a state court rather 
than a federal court. 

Mr. Schwartz: That is right. That is what I shall 
address myself to. 

Mr. Hardy: If your Honor please, we are the moving 
parties in this motion. 

The Court: Yes, but you have not raised the question 
of jurisdiction of the court. 

Mr. Hardy : Yes, we have. 

The Court: I do not so understand your motion. You 
raised the question of jurisdiction on the ground the New 
York court was the court they should apply to. 

Mr. Hardy: We raised this question or we make that 
contention, that the New York court has exclusive juris- 
diction of this subject matter and certainly of some of 
these parties. 

That would mean, of course, that the State court has 
no jurisdiction. That is the holding of the cases upon 
which we shall rely. 



104 South Side Theatres, Inc., et al. vs. 

The rule is that a court which first procures jurisdic- 
tion has exclusive jurisdiction and that means to the 
exclusion of all other courts — all other course of co- 
ordinate jurisdiction. 

The Court: I understand your point in that respect 
but I am beginning at the very foundation. Whether 
the New York court, because it has assumed jurisdiction 
and is the first court in point of time to do that, has ex- 
clusive jurisdiction is one of the issues presented here. 
But we have a situation here where it appears to this 
court, as indicated the other day, this court has no juris- 
diction whether there [4] had been an action filed in New 
York or not. 

In other words, here are two California corporations 
quarreling over the dissolution of a joint venture agree- 
ment. That being true, there is a question in my mind 
as to whether I can do anything at all. In other words, 
whether I should not dismiss this case for want of juris- 
diction and then the plaintiff could either file in New 
York or the State court, or in Arkansas or any other place. 

That is the question I am primarily interested in. 

Mr. Hardy: They base their — their — there are two 
reasons why this court does not have jurisdiction. 

In the absence of this decree the jurisdiction would 
probably be in the State court. It would not be here. 
With the decree applying to this subject matter then the 
jurisdiction is exclusively in the District Court for the 
Southern District of New York, or, rather, in the Su- 
preme Court of the United States because this case is on 
appeal. This very decree upon which they base their 
action, to justify their action, is on appeal in the Supreme 
Court at their instance on an assignment of error which 
will pull this decree up by the roots. 



United West Coast Theatres Corporation, et al. 105 

The Court: Those copies only reached me this morn- 
ing and I haven't had an opportunity to go into that mat- 
ter. However, I have given the question of the jurisdic- 
tion of this court a great deal of thought, irrespective and 
notwith- | 5] standing the fact that another Federal court 
has assumed jurisdiction of the parent corporation — one of 
the corporations in this case. In other words, it is one of 
those cases that appears to me from a reading of the com- 
plaint, that I just haven't any jurisdiction over regardless 
of whether there is a decree in New York or not. 

Mr. Hardy: That is all your Honor need to decide. 

The Court: That is all I need to decide and if I do so 
decide then I do not have to cross the other bridges. 
/ Mr. Hardy: Now, what I rose to mention in the be- 
ginning was, who do you desire to open this case? 

The Court: Well, I have raised the question because 
I told counsel the other day T felt I didn't have jurisdiction 
and asked the plaintiff to justify the jurisdiction in this 
court, and also to hear the points raised by you by your 
motions, but I think plaintiff's counsel is probably re- 
sponding to that request. 

Mr. Hardy: Then I shall not try to disturb your 
Honor's present position. 

The Court: I wondered if you were trying to talk me 
out of a position that might be advantageous to you. It 
is a rather common occurrence for those things to happen 
so I wasn't surprised. 

Mr. Hardy: No, indeed, your Honor. 

The Court: You may proceed, Mr. Schwartz. |'6| 

Mr. Schwartz: T think there is more to Mr. Hardy's 
position than meets the eye. T think he is seriously con- 
cerned with the question of venue here rather than juris- 
diction. 



106 South Side Theatres, Inc., et al. vs. 

The question which your Honor raises, and properly 
so, is whether this court or any district court of the United 
States has jurisdiction. 

The Court : I am only interested in this District Court. 

Mr. Schwartz : When we get through with this Dis- 
trict Court then we can go into the venue, but now your 
Honor wants an argument on the question of whether 
this court has jurisdiction. 

There is no question as to diversity of citizenship. It 
is only a question of — in our complaint we state the matter 
involves a Federal question. I think your Honor has the 
facts in mind but it might be well to touch upon them for 
a moment. 

The Court: I am familiar with it. I do not want to 
prevent counsel from having his say but I do want you 
to know what I have in mind. 

In the first place, you have brought this action for the 
purpose of terminating a joint venture agreement. You 
have pleaded the joint venture agreement and the circum- 
stances under which that agreement can be terminated. 
You in substance, allege that under the decree of the New 
York court that a decree has been made and that it comes 
within the [7] provisions of the joint venture agreement. 

You stated to me when you presented this ex parte that 
you did not know whether you were going to be held in 
contempt of that decree or not and that you didn't know 
where you stood and you wanted a determination of that 
question. But now you have alleged this joint venture 
agreement that sets forth a recognition in a sense, that 
perhaps the joint venture agreement might be subject to 
adverse ruling by the Federal court under the Anti-trust 
Act. 

Mr. Schwartz: That is correct, sir. 



United West Coast Theatres Corporation, et al. 107 

The Court: And upon the happening of such a con- 
tingency the agreement was to terminate. And then turn 
to your prayer. What do you ask? 

First, you ask that the venture agreement be declared 
terminated and have no further force or effect. 

Second, that it be decreed that the plaintiffs are no 
longer bound to perform the venture agreement or any 
part thereof; that the court declare such other rights or 
duties as may be necessary. And then you ask for a 
receiver, an order to show cause. 

Really what you are asking for in this case is covered 
by one and two, that the agreement be terminated. Isn't 
that correct? 

Mr. Schwartz : But not for the reason for which your 
Honor apparently has in mind. In other words, we say 
here [8] that this agreement may be illegal under the 
Sherman Act. The reference to the Paramount case de- 
cree is merely for the purpose of stating to this court 
that the plaintiffs are under the jurisdiction of that court 
— not the defendants, but the plaintiffs. That the court in 
New York has stated in effect that pooling agreements 
are illegal. That the plaintiffs in this case have engaged 
in effective pooling agreements and furthermore, that these 
plaintiffs shall cease and desist after July of 1947 from 
further carrying out any such illegal agreement. 

The Court: But counsel, what are you seeking from 
this court? You are seeking a termination of that agree- 
ment, of the agreement between the two California cor- 
porations. That is what you are seeking. 

Mr. Schwartz: Or in the alternative this court could 
say, if it so found — 

The Court: And I either find for the plaintiff or de- 
fendant if I determine that question. 



108 South Side Theatres, Inc., et al. vs. 

Mr. Schwartz: That is correct. 

The Court: But after all it is a question of whether 
or not the contingency has occurred that terminates the 
joint venture agreement. 

Mr. Schwartz : No, sir, that is not our position your 
Honor. That happens to be an incident in this case. We 
are not asking this court to say this termination agree- 
ment [9] is — what we are asking you to decide — we are 
asking your Honor to study the joint venture agreement 
in the light of the Sherman Act and not in the light of the 
decree, and certainly not as far as the termination agree- 
ment itself is concerned. That we know is a State matter. 
But the courts have held, and I am sure your Honor is 
familiar with the rulings, that if you do have jurisdiction 
then you may decide incidental matters for a complete 
disposition of the case. 

Our contention in this court, your Honor, and I hope 
I can make it clear, is that we are asking you to find that 
this joint venture agreement under the Sherman Act, is 
illegal. 

We cite the case in our complaint because it is perfectly 
proper, the Paramount decree, as authority for holding 
that this joint venture agreement in this lawsuit is illegal. 

Now, if your Honor holds that then it must follow that 
the termination of this contract should be ordered because 
we are under compulsion as plaintiffs — that is plaintiffs 
in this case but defendants in New York, not to engage 
in further activities in regard to this type of agreement. 

Now, that is the issue and that I submit to your Honor, 
is a Federal question because your Honor is going to 1 10] 
have to determine whether or not the Sherman Act applies 
to this venture agreement. 



United West Coast Theatres Corporation, et al. 109 

Now, it might be that your Honor would say it doesn't 
and — 

The Court: The joint venture agreement also recog- 
nizes the Cartwright Act. 

Mr. Schwartz: Certainly if your Honor found there 
was no interstate commerce in this case you could — in 
other words, what we want your Honor to do in this case 
is terminate this agreement without liability. We want 
the court to say that you can terminate this agreement 
without liability to the defendants. That is why we are 
in here on an action for declaratory relief. 

I would like to say — for example I would like to cite the 
case of Rambusch vs. Brotherhood of Painters, Decora- 
tors and Paperhangers of America, 105 Fed. (2d) 134. 
This case comes out of the Second Circuit. Of course, 
the facts are not on all fours here but they are similar 
enough to warrant this conclusion by the court. 

After going into the question the court said : 

"The petition for a declaration of illegality of a 
contract under the Anti-Trust laws and of unlawful 
restraint of interstate trade by the defendants does, 

. however, present a Federal question adequate to give 
the district court jurisdiction." [11] 

That is our position here. 

On the following page we find this language by the 
court : 

"We shall consider both these points, having in 
mind, however, that we cannot interfere with the 
contract the parties have made unless it is one which 
is in definite violation of law, and that we ought not 
to do indirectly by contract construction what we are 
thus prevented from doing directly." 



110 South Side Theatres, Inc., et al. vs. 

We are not asking this court to construe the termination 
agreement. That is properly a matter for the State court. 
What we are asking this court to do is determine the 
legality or illegality under one of the laws of the United 
States, of this joint venture agreement which brought 
about this situation. 

I don't go into the facts here because I think your 
Honor is familiar with how this joint venture agreement 
came into being. 

I would like to cite the case of Young & Jones vs. 
Hiawatha Gin & Manufacturing Company, 17 Fed. (2d) 
193. This is a district court case out of Mississippi. 

In that case the court said: 

"If such an inspection reveals a clear and sub- 
stantial suit or controversy over the validity, con- 
struction, or effect of a law regulating commerce, 
[12] which will be defeated or sustained, according 
to the construction given such law, then it may be 
fairly said that the suits arise under a law regulating 



commerce/ ' 



And the court took jurisdiction. 

In the case of Smith vs. Kansas City Title Company, 
255 U. S. 180, at page 199, the court said: 

"The general rule is that, where it appears from 
the bill or statement of the plaintiff that the right to 
relief depends upon the construction or application 
of the constitution or laws of the United States, and 
that such Federal claim is not merely colorable, and 
rests upon a reasonable foundation, the district court 
has jurisdiction under this provision." 



United West Coast Theatres Corporation, et al. Ill 

And to the same effect we find in Carter vs. Bramlett, 
in 51 Fed. Supp. 547, The First National Bank vs. Wil- 
liams, a Supreme Court case, reported at 252 U. S. 504, 
wherein the Supreme Court said: 

"What constitutes a cause arising 'under' the laws 
of the United States has been often pointed out by 
this court. One does so arise where an appropriate 
statement by the plaintiff, unaided by any anticipation 
or avoidance of defenses, discloses that it really and 
substantially involves a dispute or controversy re- 
specting the validity, construction, or effect of an Act 
of Congress. If the plaintiff thus asserts [13] a 
right which will be sustained by one construction of 
the law, or defeated by another, the case is one aris- 
ing under that law." 

That is my position, your Honor, on the question of 
jurisdiction of this court. And I should like to ask the 
court if I may at this time, simply for the purpose of 
keeping myself straight on this thing, if the court would 
ask counsel for the defendants to limit his argument to 
this question. 

Mr. Hardy : If the court please, if it were not for the 
decree of the New York court this case would not be here 
or in any other court. What this case is about and what 
it is necessarily about, and what this court will have to 
consider to decide it, is what does this decree mean ? Does 
it apply to this transaction? 

The Court: Counsel has presented his authorities 
solely on the question of jurisdiction, forgetting about 
the New York decree. What is your position in that re- 
spect? 



112 South Side Theatres, Inc., et al. vs. 

Mr. Hardy: It would probably be in the State court 
in the absence of this decree. I think in the absence of 
this decree, of course, it would state no cause of action in 
any court. [14] 



Mr. Schwartz: Well, your Honor is going to have 
here a factual situation to determine that. 

The Court: No, I am not. 

Mr. Schwartz: I don't think your Honor wants me to 
reply to why we didn't go to the Supreme Court because 
I don't think that is the question here any more than they 
would want to state to this court why they don't want to 
take the theatre and operate it. It is theirs. 

And while I am on that subject, your Honor, I would 
like to state right here and now that we have tendered 
this theatre to these people. The title is in them and we 
now here in open court and on the record again tender it 
for their operation. 

The Court: Counsel, after studying this I am satisfied 
this court has no jurisdiction. I think the lack of juris- 
diction can be sustained, first, as reflected by your com- 
plaint — no diversity of citizenship, and, secondly, that 
the New York court has assumed jurisdiction. 

The problem that is concerning me is if there cannot 
be some arrangement made for the operation of this the- 
atre without closing it down, resulting in a loss, there 
should be some way to avoid that. For instance, if it is 
[21] closed down and if you are eventually wrong in this 
matter, you would be liable for damages. On the other 
hand, if you eventually prove you are right you would 
still be damaged. Some arrangement should be made by 



United West Coast Theatres Corporation, et al. 113 

agreement between the parties or some other step taken, 
for the continuation of this theatre. 

I have understood from counsel that there is no com- 
plaint as to the manner in which the former manager is 
operating the theatre. The former manager is acting as 
receiver in the case but is receiving for those services 
nothing more than his salary as manager. Nobody has 
been hurt because of that. Is that correct, counsel? 

Mr. Schaefer: I don't believe I went quite as far as 
that, your Honor. I think it was stated that it was satis- 
factory that the present manager continue but there was 
no statement made as to anyone being hurt or any damage 
resulting. 

I don't think we went into that point of the question. 
It was merely that we were satisfied that this manager 
carry on. 

The Court: There was an order, I believe by stipula- 
tion, that he be paid his regular salary. 

Mr. Schaefer: That is correct. 

The Court: The theatre has been in operation as I 
understand it and is going along the same as before ex- 
cept [22] it has been under this manager, nominally under 
the direction of the court, but as a matter of fact proceed- 
ing and operating as before. 

Mr. Schwartz: That is true. 

The Court: That has been my understanding. If I 
have no jurisdiction then the receivership is terminated. 
There should be some arrangement made for the continued 
operation of this theatre so as to preclude unnecessary 
damages that might arise to either party. 

Mr. Hardy : If your Honor please, may I say this ? 
The decree simply said that they shall cease to perform 



1 14 South Side Theatres, Inc., et al. vs. 

a certain kind of contract. Probably up to this moment 
they haven't done that. I think we shall take such action 
as will prevent unnecessary loss to us when they comply 
with the decree. They can walk away from the theatre. 
I think that is all, in a word, that the decree requires them 
to do. 

The Court: That is what we have been trying to pre- 
vent. If this theatre is closed down it will cause damage 
to all parties. 

Mr. Hardy: They are trying to go further than that. 
They are trying to force us into a position about that 
theatre. 

Mr. Schwartz: We are not trying to force them into 
any kind of position. I think we have always been fair 
and open about the whole thing. [23] 

Mr. Hardy: Well, I don't know. One may be forced 
by fair and open action. We are not required to operate 
that theatre. The decree doesn't say we shall operate the 
theatre or anybody shall. 

The Court: But if the effect of that decree is to ter- 
minate the agreement then you can do as you please with 
it, can you not? 

Mr. Hardy: Yes. 

The Court: That is the effect of it. 

Mr. Hardy: Yes. 

The Court: The agreement is terminated. 

Mr. Hardy: Yes. 

The Court: And then the theatre is closed down and 
somebody has suffered a loss. 

I am talking about this not from a legal point of view 
but from a practical point of view, from a common sense 
point of view. Some arrangement should be made for the 
operation of this theatre until this litigation is completed. 



United West Coast Theatres Corporation, et al. 115 

Mr. Hardy: Well, of course, we will make arrange- 
ments to prevent unnecessary loss. I do not mean to say 
that we will make any arrangements with these parties. 
Their arrangements have gotten them afoul of the Anti- 
Trust law. 

Mr. Schwartz: I resent that kind of statement, if 
your Honor please. There is a record being made here 
and I resent that kind of imputation, that we have "gone 
afoul" by our [24] actions. That is Mr. Hardy's summa- 
tion. 

The Court: Well, counsel, this court has practiced law 
sufficiently long and sat on the bench long enough so that 
these imputations and comments of counsel mean very 
little. I have made lots of them myself when I practiced 
law. That was over a period of about 25 years. I have 
accused opposing counsel of everything and I understand 
quite well what is going on. I do not take it too seriously. 
Whether or not they have under this agreement run afoul 
of the Anti-Trust law I am not passing on and that is 
immaterial to the point that I am making. 

I am going to sign an order that so far as this court is 
concerned, will terminate the receivership. Now what 
I want is not a legal problem. It is a business problem 
whereby some arrangement be made that will continue 
the operation of this theatre — to see that some night it 
isn't closed down. That isn't a legal problem but there is 
a practical problem confronting all of us. Suppose this 
agreement is terminated and the theatre is closed. If that 
is so the plaintiff has a right to walk away and leave the 
theatre. Now, if he is right in that respect and does walk 
away and leaves the theatre and the defendant says, "Well, 
he didn't have a right to do that" and then they find out 
that he did have such a right, nevertheless there is a loss, 



116 South Side Theatres, Inc., et al. vs. 

and what I am trying to do by my comments is to see if 
there isn't some [25] plan whereby counsel can come to 
for the continued operation of this theatre by somebody 
or a third party. I do not care who it is. I am interested 
in preventing any further losses because of this litigation 
either here or in New York. 

Mr. Hardy: If your Honor please, the problem of 
operating this theatre involves things that do not appear 
on the surface here. Now, this company is required to 
discontinue the performance of this venture agreement. 
As they interpret it I suppose all they need to do is lock 
the door of the theatre and walk away and say "There 
it is." 

Now, the operation of the theatre isn't just the position 
of bricks and mortar. They have contractual rights ap- 
pertaining to the operation of that theatre. The New- 
York decree probably meant that they were to divest 
themselves of those rights and leave them with the theatre 
when they left. That has not been done. 

The New York case is based upon allegations which 
have been proved and adjudicated in that court — 

The Court: Which are not final. 

Mr. Hardy: Which are not final. That those de- 
fendants enjoyed certain special privileges and priorities 
and discriminations with regard to the procurement of 
film and with regard to the run and clearance and all of 
the other important incidents of the operation of an ex- 
hibition business. For the operation of the Alto Theatre 
they enjoyed all of [26] those things. 

Now, they do not give them up. They certainly have 
not said a single solitary word about taking those things 
and delivering them with the Alto Theatre. That decree 
did not intend that they should deliver bricks and mortar. 



United West Coast Theatres Corporation, et at. 117 

It intended they should deliver that with a business, a 
running business, so that anybody who should undertake 
to operate that theatre after these gentlemen shall leave it 
will be confronted with that situation and I say that he 
will be confronted with a situation described in the Gov- 
ernment's case. He will discover that there is a Chinese 
wall that he will find very difficult if not impossible, to 
surmount. 

Now, what this gentleman has said — he seemed to have 
been personally offended because I made a statement of 
fact about his clients violating the Anti-Trust laws. They 
have violated the Anti-Trust laws. It is adjudicated in a 
decree upon which he relies and which he brought into this 
court. 

I meant no personal offense to him as he must have 
known, but it certainly is true that on the record that he 
has made in this court his clients have violated the Anti- 
Trust laws. But to come back to this theatre — 

Mr. Schwartz: May I interrupt at this point, your 
Honor, to ask Mr. Hardy what they want? [27] 

The Court: Just a moment. I will give you an oppor- 
tunity to answer. 

Mr. Hardy: What we want and what we think his 
clients ought to have done to really comply with the New 
York decree — he has asked what we want. We want the 
Alto Theatre and we want our Fifth Avenue Theatre. 

Mr. Schwartz : That is not before this court. We are 
talking about the receivership and your Honor is being 
very decent about the thing in suggesting, apart from the 
legal points, what are we going to do about operating the 
receivership, terminating the receivership — purely from 
a business standpoint what are we going to do about the 
theatre. 



118 South Side Theatres, Inc., et at. vs. 

The Court: Counsel, let me say this: I am going to 
take this matter under submission and if you gentlemen 
do not agree or do not make an honest effort to keep this 
theatre open I may hear this matter on its merits and let 
a receiver stay in there until the Supreme Court passes 
upon it and we have a ruling and thereby retaining juris- 
diction. 

I am giving you gentlemen an opportunity to get to- 
gether around a table and work out a decent, fair method 
to prevent the accumulation of unnecessary damages. If 
counsel are not willing to do that they are not entitled to 
any courtesies from this court or any aid. 

Mr. Hardy: Your Honor may depend upon it that we 
are going to do everything possible to avoid unnecessary 
damages. [28] 

The Court: That is good talk, but I want you to get 
down together around the table and do it. If I should 
dismiss this action this afternoon that theatre would close 
tonight. There would be no means of operating it. 

Mr. Hardy : It may be impossible to operate that the- 
atre unless the person who does operate it gets the con- 
tractual rights it has now. 

The Court: This has the appearance to me of trying 
to build up another lawsuit or damages and this court is 
not inclined to encourage that situation. There should be 
until this litigation is completed, whether they are going 
to bring any other action or whether they want to appeal 
from my ruling, some arrangement for the continuation 
of this theatre. 

Mr. Hardy: If your Honor please, if they do what 
the decree required them to do, to discontinue the per- 
formance of that contract and walk away from the the- 
atre, so to speak, I think we shall do everything possible 



United West Coast Theatres Corporation, et al. 119 

to resume possession and operate the theatre, but we may 
have at once a problem. They have not given nor indi- 
cated that they should have for the operation of that 
theatre, the contractual rights with regard to films and all 
the other things that they have procured for it — the pre- 
ferential rights which only they have been able to enjoy. 
But we may operate it without that. If we do that is one 
of the factors. [29] 

The Court: Can arrangements be made so that they 
get the benefits of the films that have been contracted for? 

Mr. Schwartz: I would think so, your Honor, sure. 

Mr. Hardy: We should have all the records they have 
got with regard to the operation of that theatre, all of the 
contracts, the written contracts. The right to examine 
them if they appertain to both theatres. 

The Court: Gentlemen, I am going to take this case 
under submission and will rule on it after the Supreme 
Court has finished with the New York decree unless you 
people can get together. 

I can see very clearly, Mr. Hardy, that you are not of 
the attitude to cooperate with this court in a matter the 
court thinks is important to both parties to prevent loss. 

Mr. Hardy: We want to operate the theatre if they 
lose it. 

The Court: And the court feels there should be some 
cooperation. I would like to see you gentlemen sit down 
around a table and see what can be done about turning 
over this property, as an interim proposition, until this 
litigation is settled, for the operation of this theatre, and 
enter into stipulations that neither side will be prejudiced 
by what you do. There is some way this can be worked 
out without the danger of closing this theatre. [30] 

Mr. Hardy: We are disposed to operate the theatre. 



120 South Side Theatres, Inc., et al. vs. 

The Court: Are you ready to take it over tonight? 

Mr. Hardy: If they leave it, but here is the fear and 
difficulty we have with regard to conferring with them and 
making some arrangement for the continuance of it. We 
will get ourselves involved in this Anti-Trust action. 

The Court : You are not a party to it ? 

Mr. Hardy: No, we are not a party to it but if we 
make deals with them with regard to the operation of that 
theatre, if we make some contractual arrangement or 
some verbal or other kind of agreement with them we may 
run afoul of that ourselves. We do not know what the 
Government officers will think about that. 

T think you may depend upon it that if they do what 
they are required to do under the decree — 

The Court: Well, you don't know what the decree 
will require of them. 

Mr. Hardy: Turn the theatre over to us, walk away 
from it, I think we will operate it to the best of our ability, 
but we do not want to operate that theatre — 

The Court: One minute you say you are afraid to 
take the contracts because you will be contaminated by it 
and the next minute you say when they offer the contracts 
to you you will operate the theatre. 

Mr. Hardy : No, I make a distinction, your Honor. [31 ] 

The Court: You are making the same kind of distinc- 
tion that Mr. Schwartz made a little while ago on the 
question of jurisdiction. 

Mr. Hardy: Well, I want to be cooperative. We 
want to be cooperative. We do not want to see the the- 
atre closed because I think, as your Honor indicated, 
there is a rule of law with regard to damages that might 
operate adversely to us. If there is any situation in which 
we can protect ourselves from damage and we don't take 



United West Coast Theatres Corporation, et al. 121 

that opportunity then we cannot collect the damages. We 
don't want the theatre closed. We have no desire to have 
it closed simply to get damages. It is our theatre and 
we want it to be a going business, a going enterprise, but 
we do not want to make any arrangement with these 
parties with regard to what shall be done — what we shall 
do with the theatre. We think if they do what the decree 
provided there will be no problem at all with regard to 
operating that theatre. We will operate it somehow but 
we want them to do what the decree provided and required 
them to do and then we will take some action. W^e will 
step into the situation and operate the theatre. 
' I think we ought to have the contractual rights which 
appertain to that theatre during their operation of it. 

The Court: A moment ago I understood you were 
afraid of them. 

Mr. Hardy: No, what I am afraid of is making some 
deal [32] with the other party to this venture about the 
future operation of the theatre. 

The Court: But you could enter into an interim agree- 
ment depending upon the outcome of this litigation. 

Mr. Hardy: I will make a statement to your Honor. 
If they comply with that decree and go away from that 
theatre we will operate it and you may depend upon it, 
but we do not want to agree with them that we will do it. 

The Court: Mr. Schwartz, what would preclude you 
from applying to Judge Hand under a petition for an order 
permitting this contract to stand in status quo until it has 
finallv been terminated? 



122 South Side Theatres, Inc., et al. vs. 

Mr. Schwartz: I don't know, your Honor. I haven't 
given any thought to it because I was firmly of the opinion 
that the parties being here, the subject matter being here, 
that your Honor would keep jurisdiction. But it did occur 
to me that your Honor might very well withhold further 
action until the Supreme Court has ruled on this. 

The Court: I do not want to continue the receivership 
out there but on the other hand, I am not going to turn 
this theatre loose for the wolves either, and see it closed 
down. One moment counsel states that if you walk away 
he will run the theatre — 

Mr. Schwartz: I don't know what he is going to do. 

The Court: That is what he says here in court and 
then [33] the next minute he says he cannot run it unless 
he has certain preferential rights and contracts that you 
have concerning the films, but he is afraid to talk to you 
about that, he is afraid he might be contaminated. 

Mr. Schwartz: What bothers me most is his interpre- 
tation of what we have to do to comply with the decree. 

The Court: Why not get an order from that court? 
That court retains jurisdiction and can make further 
orders in the matter. If I discharge the receiver there 
will be a shut-down of the theatre and if you are not 
justified in permitting the theatre to shut down it might 
subject your client to damages. That is what I am trying 
to prevent. 

Mr. Schwartz: I appreciate that. 

The Court: I am going to take the matter under sub- 
mission and if counsel cannot work something out I will 
have to rule on it. 



United West Coast Theatres Corporation, et at. 123 

The attorneys in the case should certainly be able to 
get together and talk this matter over. I don't know 
whether your clients have any personal feelings in the 
matter or whether it is simply a cold-blooded business 
proposition, but as far as the lawyers are concerned they 
should be able to discuss the matter fully. I do not believe 
either side would be in contempt of court if counsel con- 
ferred under the direction and order of this court, to 
arrange for the operation of this theatre until the status 
of the theatre can be [34] determined. 

Mr. Schwartz: I agree with you. 

The Court: And if you cannot do that then I think, 
Mr. Schwartz, you should determine what approach you 
wish to make. An appeal here is not going to do you any 
good because you are not going to have a receiver. 

Mr. Schwartz: Well, I am perfectly willing to get to- 
gether with Mr. Hardy and see if we can work it out. 

The Court: It would seem to me the court in New 
York would permit the so-called joint venture agreement 
to continue until that litigation has been terminated. 

Mr. Schwartz: I want to state to the court we are 
willing to turn the theatre over to them with the film con- 
tracts and everything that goes with it — personnel, what- 
ever else it takes to run that theatre, but I would like to 
say this, your Honor, and I can appreciate the fact that 
this court would not like to keep a receiver there as such, 
but when you examine the thing, as your Honor knows, 
the receiver is the manager and he is getting the manager's 
salary as his receivership fee and I don't think there would 
be any great harm done if your Honor should decide to 



124 South Side Theatres, Inc., et al. vs. 

keep him in there and see what happens with the Supreme 
Court litigation. But I think we should follow your 
Honor's suggestion and see what we can do — if we can 
get together and if we can that will take care of that, 
and if we can't we will come back. [35] 

Mr. Hardy: If your Honor please, may I make this 
suggestion? Your Honor might make an order discharg- 
ing the receiver and requiring him to turn the theatre over 
to the South Side Theatres. 

The Court: That would be adjudicating the matter 
here. 

Mr. Hardy: That would be an adjudication of what 
they are asking me to do, and I don't think I have any 
right to do that. 

The Court: I could discharge the receiver but then 
the theatre would be sitting there dark. 

Mr. Schwartz: How long would your Honor want to 
keep the matter under submission? 

The Court: I am in no hurry. The investment here 
is such it should be protected and there should be some 
way of holding the matter in status quo until you know 
where you stand. If counsel refuses to operate I will rule 
on the matter. 

The matter stands submitted. 

(Whereupon, at 11:10 o'clock a.m., the above entitled 
matter was concluded.) 

[Endorsed] : Filed Jan. 25, 1949. Edmund L. Smith, 
Clerk. [36] 



United West Coast Theatres Corporation, et al. 125 

In the District Court of the United States, in and for the 

Southern District of California 

Central Division 

No. 7282-BH Civil 
Honorable William C. Mathes, Judge Presiding 

UNITED WEST COAST THEATRES CORPORA- 
TION and FOX WEST COAST AGENCY COR- 

PORATION ' Plaintiffs, 

vs. 

SOUTH SIDE THEATRES, INC., and MARCO 
WOLFF, FANCHON SIMON, ROY N. WOLFF 
and RUBE WOLFF, joint venturers, doing business 
under the name of SOUTH SIDE ASSOCIATES, 

r Defendants. 

1. TWENTIETH CENTURY-FOX FILM CORPO- 
RATION, 

2. NATIONAL THEATRES CORPORATION, 

3. LOEWS INCORPORATED, 

4. PARAMOUNT PICTURES DISTRIBUTING 
CO., 

5. PARAMOUNT PICTURES, INC., 

6. PARAMOUNT FILM DISTRIBUTING COR- 
PORATION. 

7. PARAMOUNT PICTURES DISTRIBUTING 
CORPORATION, 

8. UNIVERSAL FILM EXCHANGES, INC., 

9. RKO RADIO PICTURES, INC., 

10. WARNER BROS. PICTURES, INC., 

11. COLUMBIA PICTURES CORPORATION, 

12. CHARLES P. SKOURAS, 

13. SPYROS P. SKOURAS, 

Third-Party Defendants. 
REPORTER'S TRANSCRIPT OF PROCEEDINGS 



126 South Side Theatres, Inc., et al. vs. 

Los Angeles, California, Monday, January 26, 1948 
Appearances : 

For moving plaintiffs and third-party defendants: 
Newlin, Holley, Sandmeyer & Coleman, by Paul Sand- 
meyer, Esquire and Frank R. Johnston, Esquire. 

For third-party defendant Loew's Incorporated : Loeb 
& Loeb, by Harry B. Swerdlow, Esq. 

For third-party defendant Paramount Pictures, Inc. : 
O'Melveny & Myers, by J. W. Chance, Esquire. 

For third-party defendants RKO Pictures, Inc., and 
Columbia Pictures Corp. : Mitchell, Silberberg & Knupp, 
by Leonard A. Kaufman, Esq. 

For third-party defendant Warner Bros. Pictures, Inc. : 
Freston & Files, by Gordon L. Files, Esq. 

For defendants: MacFarlane, Schaefer & Haun, by 
Henry Schaefer, Jr., Esq., Russell Hardy, Esq. 

Los Angeles, California, Monday, January 26, 1948 
10:00 A. M. 

(Case called by the clerk.) 

The Court: I have read the motions, gentlemen, and 
the memorandum filed. Do you have anything to add in 
addition to what is said in the memorandum? 

Mr. Swerdlow : I assume that the court is familiar 
with the factual situation involving the two theatres? 

The Court: I have read the entire file. Is there a 
question of jurisdiction here? 

Mr. Swerdlow: The question of jurisdiction has been 
raised in Judge Harrison's court and he has taken it 
under advisement. 



United West Coast Theatres Corporation, et al. 127 

The Court: I do not know of any greater waste of 
time of the court and counsel then for anyone to be in the 
Federal Court when there is no jurisdiction. Maybe I 
am unable to see it, but I have not seen any basis for 
Federal jurisdiction here. Suppose the State of Cali- 
fornia brought a proceeding contending that this arrange- 
ment was violative of the Cartwright Act, where would 
you be? 

Suppose that was the condition upon which the parties 
or one of them elected to exercise the option of terminat- 
ing the arrangement, would that be an action brought 
under the laws of the State of California? 

Mr. Swerdlow: The problem arose, your Honor, as 
a result of the Paramount decree. 

The Court: I understand. But you are suing on an 
agreement. May A and B make a contract and stipulate 
that if Congress passes the proposed revision of Title 28 
of the United States Code, that either one of them shall 
have the option then and there to terminate it: and if so, 
would a suit brought to declare that agreement terminated 
pursuant to the exercise of the option by one party be an 
action brought under the Constitution or laws of the 
United States? 

Mr. Swerdlow: Argument was made in Judge Har- 
rison's court. He has taken it under advisement but he 
has made no ruling on it. But since that time the defend- 
ants have filed their counterclaim. 

The Court : That won't confer jurisdiction. 

Mr. Swerdlow: I realize that, but we are here on the 
counterclaim. 



128 South Side Theatres, Inc., et al. vs. 

The Court : I raise the question because it is a great 
waste of time and effort to be here when you should be 
over in the State Court. 

Mr. Hardy: Your Honor, may I say a word on that? 

The Court : It is under submission by Judge Harrison ; 
so I am not going to rule on it. 

I have read the motions and I will rule on these motions. 

Mr. Hardy: We did not make the contention in that 
court that there was a Federal question. I do not know 
whether [3] you intended to suggest — 

The Court: The plaintiff makes the contention it is 
a Federal question. 

Mr. Hardy: As a matter of fact we had a ruling, a 
verbal ruling, by Judge Harrison, as your Honor suggests, 
that there was no jurisdiction. He suggested, however, 
that the parties should get together and make an arrange- 
ment about continuing the Alto Theatre, continuing to 
operate it. We took the position that we did not want 
to do that; that these folks had got afoul of the anti- 
trust laws — 

The Court: That won't help me any, Mr. Hardy. I 
just raised the suggestion because this meeting is just the 
same as if it never happened if the court does not have 
jurisdiction so far as the legal foundation is concerned. 

Mr. Hardy: Our position is precisely as your Honor 
has indicated. 

The Court : I will hear the motions. 



[Endorsed] : Filed Jan. 25, 1949. Edmund L. Smith, 
Clerk. [4] 



United West Coast Theatres Corporation, et al. 129 

[Endorsed] : No. 12165. United States Court of Ap- 
peals for the Ninth Circuit. South Side Theatres, Inc., 
and Marco Wolff, Fanchon Simon, Roy N. Wolff and 
Rube Wolff, joint venturers, doing business under the 
name of South Side Associates, Appellants, vs. United 
West Coast Theatres Corporation, Twentieth Century-Fox 
Film Corporation, Charles P. Skouras, Spyros P. Skouras, 
Fox West Coast Agency Corporation, Frank Millan, Re- 
ceiver, etc., Loews, Inc., RKO-Radio Pictures, Inc., 
Columbia Pictures Corp., Warner Bros. Pictures, Inc., 
and Paramount Pictures, Inc., Appellees. Transcript of 
Record. Appeal From the United States District Court 
for the Southern District of California, Central Division. 

Filed January 28, 1949. 

PAUL P. O'BRIEN 

Clerk of the United States Court of Appeals for the 
Ninth Circuit. 



130 South Side Theatres, Inc., et al. vs. 

In the United States Circuit Court of Appeals 
for the Ninth Circuit 

No. 12165 

SOUTH SIDE THEATRES, INC., et al., 

Appellants, 

vs. 
UNITED WEST COAST THEATRES CORPORA- 
TION, et al., 

Appellees. 

POINTS AND DESIGNATIONS OF TRANSCRIPT 
UNDER RULE 19, SUBDIVISION 6 

Pursuant to Rule 19, Subdivision 6, the Appellants here- 
by make their statement of points relied upon and desig- 
nation of the portions of Clerk's Transcript to be printed 
in support of such points. 

Point I 
That the District Court was without jurisdiction of the 
controversy and that the appointment of the Receiver was 
therefore void. 

Point II 
The appointment of the Receiver having been void the 
Court was without authority to charge the expense of 
the receivership against the Appellants. 

********* 

Dated: February 1, 1949. 

MACFARLANE, SCHAEFER & HAUN 
HENRY SCHAEFER. JR. 
WTLLIAM P. GAMBLE 
JAMES H. ARTHUR 

By William Gamble 

Attorneys for Appellants 
RUSSELL HARDY 
Of Counsel 

| Affidavit of Service by Mail.] 

[Endorsed]: Filed Jan. 31, 1949. Paul P. O'Brien, 
Clerk. 



No. 12165 
IN THE 



United States Court of Appeals 



FOR THE NINTH CIRCUIT 



South Side Theatres, Inc., et al. } 

Appellants, 

vs. 

United West Coast Theatres Corporation, et ah, 

Appellees, 



BRIEF FOR APPELLANTS. 



Macfarlane, Schaefer & Haun, 
Henry Schaefer, Jr., 
William P. Gamble, 
James H. Arthur, 
1150 Subway Terminal Building, Los Angeles 13, 
Attorneys for Appellants, 

Russell Hardy, 
Of Counsel. 

JJLft OWRIBN, > 



Parker & Company, Law Printers, Los Angeles. Phone MA. 6-9171. 



TOPICAL INDEX 

PAGE 

Opinion below 1 

Jurisdiction of the District Court 1 

Jurisdiction of this Court 3 

Statement of the case 4 

Specification of errors 14 

Questions presented 14 

Argument 15 

There was no principal subject of Federal jurisdiction to which 
the receivership was ancillary 15 

A Federal Court has no jurisdiction to appoint a receiver and 
maintain a receivership where the receivership is an end in 
itself 17 

A judgment of a court which has no jurisdiction is void 17 

A court which has instituted and continued a receivership 
without jurisdiction, may not assess any of the costs and 
expenses of the receivership against the property or against 
the defendants 18 

Conclusion 20 



TABLE OF AUTHORITIES CITED 
Cases 

Butler v. McKey, 138 F. 2d 373 18. 

Finnerand v. Burton, 291 Fed. 37 19 

Fryer v. Weakley, 261 Fed. 509 18 

Gordon v. Washington, 295 U. S. 30 17 

Hawes v. First Nat'l Bank, 229 Fed. 51 19 

Kelleam v. Maryland Casualty Co., 312 U. S. 377 17 

Noxon Chemicals Products Co. v. Leckie, 39 F. 2d 318 19 

Pusey and Jones Co. v. Hanssen, 261 U. S. 491 17 

Rhode Island v. Massachusetts, 12 Pet. 657 18 

Robinson v. Edler, 78 F. 2d 817 18 

St. Louis and San Francisco Ry. Co. v. Wilson, 114 U. S. 60.... 16 
Salem Trust Co. v. Manufacturers Finance Co., 264 U. S. 182.... 16 

Shapiro v. Wilgus, 287 U. S. 348 17 

Thomson v. Butler, 136 F. 2d 644 16 

United States v. Paramount Pictures, Inc., et al., 68 S. Ct. 915.... 5 
Wylie v. State Board of Equalization, 21 Fed. Supp. 604 16 

Statutes 

Act of Congress, July 2, 1890, Sec. 1 (15 U. S. C. A., Sec. 4).... 2 

United States Code, Title 28, Sec. 1291 3 

United States Code, Title 28, Sec. 1292 3 

United States Code, Title 28, Sec. 1331 1 

United States Code, Title 28, Sec. 1332 1 

United States Code, Title 28, Sec. 1337 1 






No. 12165 
IN THE 



United States Court of Appeals 



FOR THE NINTH CIRCUIT 



South Side Theatres, Inc., et al., 

Appellants, 

vs. 
United West Coast Theatres Corporation, et al., 

Appellees. 



BRIEF FOR APPELLANTS. 



Opinion Below. 

This is an appeal from an order of the United States 
District Court for the Southern District of California, 
Central Division, entered on November 22, 1948. The 
order of the District Court [R. 90] has not been published. 
No written opinion has been prepared or filed by that 
Court. 

Jurisdiction of the District Court. 

The rules of this Court require that the brief shall dis- 
close the basis upon which it is contended the District 
Court had jurisdiction. Appellants contend that the Dis- 
trict Court had no jurisdiction of this case for any pur- 
pose. Jurisdiction, if it had existed, would have to be 
based on Title 28, United States Code, section 1331 or 
1332 or 1337, which read as follows: 

Section 1331. The district courts shall have original 
jurisdiction of all civil actions wherein the matter in 



— 2— 

controversy exceeds the sum or value of $3,000, ex- 
clusive of interest and costs, and arises under the 
Constitution, laws or treaties of the United States. 

Section 1332. (a) The district courts shall have 
original jurisdiction of all civil actions where the 
matter in controversy exceeds the sum or value of 
$3,000, exclusive of interest and costs, and is be- 
tween : 

(1) Citizens of different States; * * * 

Section 1337. The district courts shall have original 
jurisdiction of any civil action or proceeding arising 
under any Act of Congress regulating commerce or 
protecting trade and commerce against restraints and 
monopolies. 

The complaint was filed by appellees on July 1, 1947. 
[R. 16.] One of the appellees, United West Coast 
Theatres Corporation, is a corporation under the laws of 
California; and the other, Fox West Coast Agency Cor- 
poration, is a corporation of Delaware. Both were alleged 
to be doing business at Los Angeles. The defendants, 
appellants here, were all citizens of California, both as to 
the corporate and individual defendants. 

The action is for declaratory relief; that is, to declare 
that a contract between the parties be terminated. [R. 9.] 

Jurisdiction was based on the ground that "the matter 
in controversy exceeds the sum or value of three thousand 
dollars ($3,000), and arises under the laws of the United 
States, to wit: Section 1 of the Act of Congress of July 
2, 1890, 15 U. S. C. A. Sec. 4, entitled 'An act to protect 
trade and commerce against unlawful restraints and 
monopolies/ commonly known as the Sherman Act." 
[R. 2.] 



— 3— 

On July 1, 1948, the District Court entered an order 
making an ex parte appointment of a temporary receiver. 
[R. 17.] On August 25, 1947, appellants filed a return 
and a motion to dismiss, which questioned the sufficiency 
of the complaint and the jurisdiction of the District Court. 
[R. 18, SO.] The District Judge refused to dismiss the 
complaint and discharge the receiver, although he decided 
that the District Court had no jurisdiction. One of his 
repeated statements to that effect was "after studying this 
I am satisfied this court has no jurisdiction." [R. 112, 
101-105, 113, 114.] District Judge William C. Mathes, 
of the same court, before whom a question in the case was 
argued, also observed, "Maybe I am unable to see it, but 
I have not seen any basis for Federal jurisdiction here." 
[R. 127.] For purely extra-jurisdictional reasons, how- 
ever, the District Judge refused to dismiss the case, and, 
instead, entered the order appealed from. 

Jurisdiction of This Court. 

Jurisdiction of this Court is based on Title 28, United 
States Code, sections 1291 and 1292, reading as follows: 

Section 1291. The courts of appeals shall have 
jurisdiction of appeals from all final decisions of the 
district courts of the United States, . . . except 
where a direct review may be had in the Supreme 
Court. 

Section 1292. The courts of appeals shall have 
jurisdiction of appeals from: 

(2) Interlocutory orders appointing receivers, or 
refusing orders to wind up receiverships or to take 
steps to accomplish the purposes thereof, such as di- 
recting sales or other disposals of property; . . . 



Statement of the Case. 

On an ex parte application, on July 1, 1947, the Dis- 
trict Court appointed a receiver for real estate of appel- 
lants at Los Angeles, consisting of a motion picture 
theatre and stores. [R. 17.] Although the District Judge 
said, "I am satisfied this court has no jurisdiction, " he 
continued the receivership for seventeen months there- 
after, he has approved and permitted purely receivership 
and other improper charges to be deducted from an in- 
come derived from the unlawful possession and use of 
appellants' property; has impounded that income with the 
Clerk of the District Court; and, although no objection 
has been made by any party, has refused to permit de- 
livery of that fund to appellants. 

This case occurred because of violations of the Sherman 
Antitrust Act by appellees. We do not mean, however, 
that this case is a proceeding under the antitrust laws. On 
July 20, 1938, the United States filed a petition in the 
District Court at New York, charging numerous corpora- 
tions engaged in distributing and exhibiting motion pic- 
tures with engaging in a conspiracy to restrain and 
monopolize the business, especially in the exhibition field. 

The petition made three charges against the defendants 
in that case which are of interest in this case, i. e., (1) 
that they controlled the supply of pictures needed in the 
theatres; (2) that by preventing theatre owners from pro- 
curing a supply of pictures, they had compelled the owners 
to sell their theatres; and (3) that they had forced owners 
of independent theatres to place their theatres in pools of 
competitive theatres controlled and operated by the de- 
fendants. 



— 5— 

The petition prayed that the defendants be divested of 
theatres unlawfully acquired, and that they be enjoined 
from further control and operation of the pools. 

On December 31, 1946 (eight years after the case was 
instituted), the District Court at New York entered a 
judgment enjoining performance of the pooling agree- 
ments as of July 1, 1947. The judgment stated that the 
defendants were enjoined "From making or continuing to 
perform pooling agreements whereby given theatres of 
two or more exhibitors normally in competition are op- 
erated as a unit or whereby the business policies of such 
exhibitors are collectively determined by a joint committee 
or by one of the exhibitors or whereby profits of the 
'pooled' theatres are divided among the owners according 
to prearranged percentages." [R. 6.] 

The case was appealed to the Supreme Court of the 
United States. On May 6, 1948, that Court affirmed the 
injunction against theatre pooling and remanded the case 
to the District Court with directions that the defendants 
be divested of theatres acquired by monopoly methods. 

United States v. Paramount Pictures, Inc., et al. 3 
. 68 S. Ct. 915. 

The appellees here, i. e. } United West Coast Theatres 
Corporation and Fox West Coast Agency Corporation, 
were not named as parties in the Government case, in the 
judgment or otherwise, directly or indirectly. Neverthe- 
less, they consider the judgment applied to them, because 
they are subsidiaries of defendants named in the judgment, 
I. e., Twentieth Century-Fox Film Corporation and Na- 
tional Theatres Corporation. [R. 6.] 



In 1939 and 1940 appellants built two neighborhood 
motion picture theatres, at Inglewood and Los Angeles, 
California, about three-fourths of a mile from each other. 
These theatres were named the Alto and the Fifth Ave- 
nue. Simultaneously the appellees also built a theatre 
about a block and a half from the Fifth Avenue. It was 
named the Academy. The three theatres, which were sub- 
stantially similar in size, furnishings and otherwise, were 
completed and ready for opening at about the same time. 

For the Alto, appellants succeeded with no trouble in 
procuring a supply of pictures, and an exhibition business 
was inaugurated at the theatre. For the Fifth Avenue, 
however, the film companies, uniformly and continuously 
refused to furnish any pictures to appellants. For the 
Academy, the film companies immediately began to fur- 
nish a full and continuous supply of pictures, and that 
theatre opened shortly after the Alto. 

After the new Fifth Avenue theatre had remained 
closed and unused for more than a year, the appellees pro- 
posed that the real estate be sold to them and that pos- 
session of the Alto theatre be placed in their hands, where- 
upon they would procure pictures for the Fifth x\venue 
theatre and operate both theatres as a joint venture for 
both parties. For appellants, this presented the choice of 
half a loaf or none. 

Accordingly, appellants conveyed the real estate and per- 
sonal property of the Fifth Avenue theatre to appellees; 
and on April 1, 1941, the parties entered into an agree- 
ment pooling the operation of both theatres exclusively in 
the hands of United West Coast Theatres Corporation, for 
ten years ending March 31, 1951. It was agreed that the 
proceeds of the pooled theatres should be divided fifty-one 



per cent to appellees and forty-nine per cent to appellants, 
and that Fox West Coast Agency should receive 5% per 
cent of the gross receipts for supervision of the joint 
business. 

The acquisition of the Fifth Avenue theatre and the 
pooling of both theatres, were made by appellees despite 
the fact that such transactions on their part were then 
specifically named in the Government antitrust proceedings 
as monopolistic and illegal. Instead of detering appellees, 
however, the illegal character of the transaction merely 
induced them to attempt to secure themselves against lia- 
bility. At the same time, therefore, appellees prepared a 
separate agreement, which recited that their conduct was 
then under scrutiny by the Government, and that if the 
pooling agreement should be objected to by the Attorney 
General as unlawful or a judgment should be entered en- 
joining the agreement, either party should have an election 
to terminate the pool without further obligation. [R. 10.] 

The judgment of the New York District Court of De- 
cember 31, 1946, enjoined the defendants from continuing 
to perform pooling agreements by which theatres were 
operated as a unit. Appellees, concluding that this applied 
to the Fifth Avenue-Alto pooling agreement, on June 9, 
1947, informed appellants that the agreement would be 
terminated on June 30, 1947. On June 10, 1947, they in- 
formed appellants that they elected to terminate the agree- 
ment forthwith. On June 27, 1947, they informed appel- 
lants that they would terminate the operation of the Alto 
theatre at midnight June 30. All that appellees were re- 
quired to do was what they thus stated, i. e., to discontinue 
the joint operation of the theatres. To this appellants 
made no objection. When appellees should have discon- 



tinued performance and departed, they intended to resume 
possession and to operate the Alto theatre. [R. 118-119.] 

Appellants, however, were prevented by action taken by 
appellees from acting upon and accomplishing that inten- , 
tion. At midnight of June 30, 1947, as appellees had 
stated, their interest in the operation of the Alto theatre 
property and business had terminated. The next day, 
however, in ex parte proceedings had without notice to 
appellants, they procured the appointment of a temporary 
receiver, who immediately took possession of the Alto 
theatre property and business, including the collection of 
rents and operation of the theatre, to the total exclusion 
of appellants. What occurred at the ex parte hearing, is 
not shown by the record, other than the statement of the 
District Judge to counsel for appellees at a subsequent 
hearing, that: 

You stated to me when you presented this ex parte 
that you did not know whether you were going to be 
held in contempt of that decree or not and that you 
didn't know where you stood and you wanted a de- 
termination of that question. [R. 106.] 

In the complaint, hied on July 1, 1947, by appellees, 
it was alleged that this case arose under the Sherman 
Antitrust Act; that the parties had made the theatre pool- 
ing agreement; that the New York District Court had 
entered a judgment which the appellees believed enjoined 
the further performance of that agreement; that they 
feared continued performance by them would be in con- 
tempt of that judgment ; that they had requested appellants 
to take and operate the theatre; that appellants had re- 
fused; and that if the theatre was not operated following 



— 9- 

their departure there would be a loss of profits and ir- 
reparable damage. 

The prayers asked that the Court declare the pooling 
agreement to be terminated, that the appellees were no 
longer bound to perform, and that a receiver be appointed 
to take charge of the property and to operate the theatre. 

Appellants were ordered to show cause why the receiver 
should not be made permanent; and they filed a return 
to that order objecting to the jurisdiction for any purpose. 

At the hearing, the District Judge held that the Court 
had no jurisdiction for any purpose. He said : 

But we have a situation here where it appears to 
this court, as indicated the other day, this court has 
no jurisdiction whether there had been an action filed 
in New York or not. [R. 104.] 

Counsel, after studying this I am satisfied this court 
has no jurisdiction. I think the lack of jurisdiction 
can be sustained, first, as reflected by your complaint 
— no diversity of citizenship, and, secondly, that the 
New York court has assumed jurisdiction. [R. 112.] 

I am going to sign an order that so far as this 
court is concerned, will terminate the receivership. 
[R. 115.] 

Despite this decision, the District Judge refused to termi- 
nate the receivership and clear the way for appellants, 
because they declined to make an agreement with appel- 
lees which was insisted upon by the District Judge, but 
which he had no authority to require. He insisted that 
appellants make an agreement and stipulation with appel- 
lees ( 1 ) for the immediate assumption by appellants of the 
possession and operation of the theatre without any inter- 



—10- 

ruption, and (2) for the protection of the appellees against 
any prejudice, liability or damage. In this regard, the 
District Judge said: 

The problem that is concerning me is if there can- 
not be some arrangement made for the operation of 
this theatre without closing it down, resulting in a 
loss. There should be some way to avoid that. For 
instance, if it is closed down and if you [appellees] 
are eventually wrong in this matter, you would be 
liable for damages. On the other hand, if you 
eventually prove you are right you would still be 
damaged. [R. 112.] 

I am talking about this not from a legal point of 
view but from a practical point of view, from a com- 
mon sense point of view. Some arrangement should 
be made for the operation of this theatre until this 
litigation is completed. [R. 114.] 

Now what 1 want is not a legal problem. It is a 
business problem whereby some arrangement be made 
that will continue the operation of this theatre — to 
see that some night it isn't closed down. That isn't a 
legal problem but there is a practical problem con- 
fronting all of us. [R. 115.] (Italics added.) 

Counsel, let me say this: I am going to take this 
matter under submission and if you gentlemen do not 
agree or do not make an honest effort to keep this 
theatre open 1 may hear this matter on its merits and 
let a receiver stay in there until the Supreme Court 
passes upon it and we have a ruling and thereby re- 
taining jurisdiction. 



—11— 

T am giving you gentlemen an opportunity to get 
together around a table and work out a decent, fair 
method to prevent the accumulation of unnecessary 
damages. If counsel are not willing to do that they 
are not entitled to any courtesies from this court or 
any aid. [R. 118.] 

The concern of the District Judge was not merely to 
have the theatre operated by appellants, for he was re- 
peatedly assured on that score. Counsel for appellants 
said: 

I think we shall take such action as will prevent 
unnecessary loss to us when they comply with the de- 
cree. They can walk away from the theatre. I think 
that is all, in a word, that the decree requires them 
to do. [R. 114.] 

Well, of course, we will make arrangements to pre- 
vent unnecessary loss. I do not mean to say that we 
will make arrangements with these parties. Their 
arrangements have gotten them afoul of the Anti- 
Trust law. [R. 115.] 

Your Honor may depend upon it that we are going 
to do everything possible to avoid unnecessary dam- 
ages. [R. 118.] 

If they do what the decree required them to do, to 
discontinue the performance of that contract and 
walk away from the theatre, so to speak. I think we 
shall do everything possible to resume possession and 
operate the theatre, but we may have at once a prob- 
lem. |R. 118-119.] 

We don't want the theatre closed. We have no de- 
sire to have it closed simply to get damages. It is 



—12— 

our theatre and we want it to be a going business, a 
going enterprise, but we do not want to make any ar- 
rangement with these parties with regard to what 
shall be done — what we shall do with the treatre. [R. 
121.] 

On November 22, 1948, the District Judge entered an 
order allowing the receiver a fee of $2,000 and the re- 
ceiver's attorneys a fee of $2,000. The order also ap- 
proved the final account, which included other receiver- 
ship items, and discharged the receiver. As to the balance 
for distribution, the order recited that "the ownership of 
the net income is subject to dispute between the parties. " 
Accordingly, it was further ordered that the balance ($59,- 
262.92), be deposited with the Clerk to be held pending 
further order of the Court [R. 90-91.] 

It is not correct that there was a dispute between the 
parties as to the ownership of the receivership income. 
Nor has any party objected to distribution of the fund to 
appellants. The objections made by appellants were not 
as to the ownership of the income, but to the validity of 
the receivership, to the unlawful deprivation of the pos- 
session and use of their property, and to the deduction 
from the income collected during that unlawful possession 
and use, of expenses and payments applicable only to the 
receivership, including the sum of $5,200 plus $400 
Christmas bonus which was deducted from the account 
under "other expenses" [R. 77, 83] and paid to the re- 
ceiver under an order of July 8, 1948. [R. 48.] 



—13— 

In approving the receiver's final account, the District 
Court allowed additional receivership expenses of $572.50, 
to which objection was made, and denied appellants' re- 
quest that the receiver and appellees be required to account 
for shortages on sales of candy and popcorn of $3,387.60. 
In other words, with these corrections the income for dis- 
tribution to appellants should have been $72,823.03 in- 
stead of $59,262.92, as follows: 

Salaries for services rendered in July 1948 

for receivership termination activities $ 450.00 

Miscellaneous expenses 72.51 

Receivership bond 50.00 

Receiver's fee 2000.00 

Receiver's attorneys' fee 2000.00 

Candy shortage 590.31 

Popcorn shortage 2797.29 

7960.11 

Income deposited with the Clerk 59262.92 

Interim compensation paid to receiver 5600.00 

$72823.03 

[R. 82, 86-87, 88, 91; Unprinted Record.] 

Upon departure of the receiver, appellants entered into 
possession of the theatre property and resumed operation 
of the business. 

The Clerk of the District Court now holds the $59,- 
262.92 claimed by appellants. 



—14— 
Specification of Errors. 

The District Court was without jurisdiction, and the ap- 
pointment of the receiver was therefore void. 

The District Court was without authority to charge any" 
expenses of the receivership against appellants, and to im- 
pound and withhold money collected by the receiver and 
belonging to them. 

Question Presented. 

The question presented by this appeal is whether the 
complaint states a claim arising under the Constitution, 
laws or treaties of the United States, or under any Act 
of Congress regulating commerce or protecting trade and 
commerce against restraints and monopolies, or shows the 
necessary diversity of citizenship among the parties; and 
whether, where the complaint fails to state such a claim or 
such a diversity of citizenship, the District Judge may in- 
stitute and continue a receivership of property and assess 
against it costs, receiver's and attorneys fees, and ex- 
penses of administration of such receivership. 



—15— 

ARGUMENT. 

There Was No Principal Subject of Federal Jurisdic- 
tion to Which the Receivership Was Ancillary. 

The action stated in the complaint did not arise under the 
Constitution, laws or treaties of the United States, nor 
under any Act of Congress regulating trade and commerce 
or protecting trade and commerce against restraints and 
monopolies. 

The complaint alleged that the matter exceeded $3,000 
and arose under the Sherman Antitrust Act, but appellees 
merely asked that the District Court declare whether they 
were bound by a contract. No allegations are contained 
in the complaint which show any dispute or controversy 
with respect to the validity, construction or effect of any 
law of the United States, or that the determination of any 
question depends upon, or that any right is claimed under, 
any law of the United States. The only adjudication pos- 
sible under the allegations of the complaint would be with 
regard to the contractual obligation of appellees under 
general law. As a reason for seeking that declaration, ap- 
pellees alleged that they desired to learn whether they would 
be guilty of contempt of the District Court for the South- 
ern District of New York, under a decree entered on De- 
cember 31, 1946, in an antitrust case. [R. 2, 6, 9.] But 
so far as contempt is concerned, the judgment of the Court 
below would have been of no validity in the New York 
District Court where contempt proceedings would be had. 
Such a contempt proceeding would be a controversy be- 
tween the New York District Court and appellees, or be- 
tween them and the Attorney General of the United States, 
neither of whom was a party in this case. 

The determination as to the contractual obligation of ap- 
pellees which they sought from the District Court, did not 



—16- 

call upon that Court to consider and apply the antitrust 
laws or any principle of the law of restraint of trade and 
monopoly. At most, it merely required a decision whether 
the judgment of the New York District Court applied to 
the contract. At most this was merely a matter of con- 
struction. Whether the judgment was valid, and whether 
the pooling contract was violative of the antitrust laws 
independently of that judgment, were neither raised nor 
within the jurisdiction of the District Court. 

There is not the necessary diversity of citizenship in the 
parties because California citizens are on both sides of the 
case. One of the plaintiffs is a California corporation, and 
the other is a Delaware corporation. The defendants are 
one corporation and four individuals, the corporation being 
a California corporation and the individuals being resi- 
dents and citizens of California. [R. 2-3.] 

Where all of the plaintiffs are not citizens of different 
States from all of the defendants, the necessary diversity 
of citizenship does not exist. 

St. Louis and San Francisco Railway Co. v. Wil- 
son, 114 U. S. 60, 29 L. Ed. 66; 

Salem Trust Co. v. Manufacturers Finance Co., 
264 U. S. 182, 68 L. Ed. 628; 

Thomson v. Butler, 136 F. 2d 644, 647 (C. C. A. 
8). 

In Wylie v. State Board of Equalization, 21 Fed. Supp. 
604, in which the plaintiffs were citizens of California and 
Rhode Island and the defendant was a citizen of Califor- 
nia, the District Court at Los Angeles dismissed the action, 
because "Only one of the plaintiffs is a non citizen of Cali- 
fornia and 'District Courts have jurisdiction if all the par- 
ties on the one side are of citizenship diverse to those on 
the other side'." 



—17— 

A Federal Court Has No Jurisdiction to Appoint a 
Receiver and Maintain a Receivership Where the 
Receivership Is an End in Itself. 

Kelleam v. Maryland Casualty Co., 312 U. S. 377; 

Gordon v. Washington, 295 U. S. 30; 

Shapiro v. Wilgus, 287 U. S. 348; 

Pusey and Jones Co. v. Hanssen, 261 U. S. 491. 

The only reasons for maintaining the receivership were 
to operate the theatre without closing it down and to pro- 
tect appellees against liability because of their unlawful 
pooling contract. That these were not subjects of Fed- 
eral or general equitable and legal jurisdiction, was stated 
by the District Judge. He said this was not a legal but 
a business problem. He was not correct in stating that it 
was "a practical problem confronting all of us" [R. 115], 
if he meant that it was a problem confronting the Court. 

A Judgment of a Court Which Has No Jurisdiction 

Is Void. 

Jurisdiction is the power to hear and determine 
the subject matter in controversy between parties to 
a suit, to adjudicate or exercise any judicial power 
over them; the question is, whether on the case be- 
fore a court, their action is judiical or extrajudicial, 
with or without the authority of law, to render a 
judgment or decree upon the rights of the litigant 
parties. If the law confers the power to render a 
judgment or decree, then the Court has jurisdiction; 
what shall be adjudged or decreed between the par- 



—18— 

ties, and with which is the right of the case, is judi- 
cial action, by hearing and determining it. 



But as this court is one of limited and special 
original jurisdiction, its action must be confined to the 
particular cases, controversies, and parties over which 
the Constitution and laws have authorized it to act, 
any proceeding without the limits prescribed is coram 
non jiidice, and its action is a nullity. . . . And 
whether the want or excess of power is objected by a 
party or is apparent to the court, it must surcease its 
action or proceed extrajudicially. Rhode Island v. 
Massachusetts, 12 Pet. 657, 718-719. 

It is a basic rule that a judgment is void and sub- 
ject to collateral attack if a lack of jurisdiction in the 
court appears on the face of the record. Butler v. 
McKey, 138 F. 2d 373, 376, C. C. A. 9. 

Robinson v. Edlcr, 78 F. 2d 817, 818, C. C. A. 9. 

A Court Which Has Instituted and Continued a Re- 
ceivership Without Jurisdiction, May Not Assess 
Any of the Costs and Expenses of the Receiver- 
ship Against the Property or Against the De- 
fendants. 

In such a case the receiver must look to the person pro- 
curing his appointment for payment of costs and expenses 
and reimbursement for his services. 

In Fryer v. Weakley, 261 Fed. 509, 514 (C. C. A. 8), 
after stating that the District Court had no jurisdiction to 
appoint a receiver, the Court, speaking through Judge San- 
born, said: 

"The conclusion is that this case falls clearly with- 
out the jurisdiction of this court, under the opinion 



—\9— 

of Judge Carland in Hawes v. First National Bank, 
229 Fed. 51, 143 C. C. A. 645. The order of the 
court below appointing the receiver must therefore 
be reversed, and the case must be remanded to the 
District Court, with directions to cause all the moneys 
and property and all the proceeds of the property 
seized or collected by the receiver to be paid over and 
delivered to the defendants W. S. Fryer and G. L. 
Fryer, and to tax the costs and expenses of the re- 
ceiver against the plaintiff below. The court, being 
without jurisdiction, has no property to pay them. As 
was well said by Judge Carland in the Hawes Case : 

"Where a receivership is procured illegally, the 
costs of the receivership may be taxed against the 
complainant procuring the appointment. . . . Courts 
may not seize property without jurisdiction, and then 
claim jurisdiction over the property because it is in 
the possession of the court.'' 

Firmer and v. Burton, 291 Fed. 37, 34 A. L. R. 
1351; 

Noxon Chemicals Products Co. v. Leckie, 39 F. 2d 
318. 



—20- 

Conclusion. 

We respectfully submit that the judgment of the Dis- 
trict Court should be reversed, with directions to the Dis- 
trict Court to disallow all receivership expenses as charges 
against appellants, to require the receiver or the appellees 
to make payment of those charges and of any and all 
shortages in the receivership estate, and to make distribu- 
tion to appellants of the funds held by the Clerk of the 
District Court. 

Respectfully submitted, 

Macfarlane, Schaefer & Haun, 
Henry Schaefer, Jr., 
William P. Gamble, 
James H. Arthur, 

By William P. Gamble, 
Attorneys for Appellants. 

Russell Hardy, 
Of Counsel. 









No. 12165 
IN THE 



United States Court of Appeals 



FOR THE NINTH CIRCUIT 



South Side Theatres, Inc., et al., 

Appellants, 



vs. 



United West Coast Theatres Corporation, et al., 

Appellees. 



BRIEF FOR APPELLEES. 



GURNEY E. NEWLIN, 

Clyde E. Holley, 
George W. Tackabury, 
Frank R. Johnston, 

Newlin, Holley, Sandmeyer & Tackabury, 
1020 Edison Building, Los Angeles 13, 
Attorneys for Appellees. 

49 

Parker & Company, Law Printers, Los Angeles. Phone MA. 6-9171. 

O'BRIEN, v 



TOPICAL INDEX 

PAGE 

Statement of jurisdiction 1 

A. Jurisdiction of the District Court 1 

B. Jurisdiction of the United States Court of Appeals 2 

Statement of the case 3 

Questions involved 7 

Argument 8 

I. 

The District Court had jurisdiction of the action by reason of 
the existence of a federal question 8 

A. The fact that there are two grounds alleged in support 
of plaintiffs' claim or cause of action, one of which may 
not present a federal question, does not deprive the 
court of jurisdiction 10 

II. 

If it be held that plaintiffs' complaint defectively alleges juris- 
diction, appellees request leave to amend said complaint 13 

Conclusion 19 

Appendices : 

Appendix A. Complaint for declaratory relief App. p. 1 

Appendix B. Amended complaint for declaratory relief 

.App. p. 9 



TABLE OF AUTHORITIES CITED 

Cases page 

American Amusement Co. v. Ludwig, 82 Fed. Supp. 265 10 

Burnrite Coal Briquette Co. v. Riggs, 6 F. 2d 226 18 

Carter v. Bramlett, 51 Fed. Supp. 547 10 

Finneran v. Burton, 291 Fed. 37 18 

General Investment Co. v. N. Y. C. R. Co., 271 U. S. 228 8. 9 

Hum v. Oursler, 289 U. S. 238 11 

Keene Lumber Co. v. Leventhal, 165 F. 2d 815 13, 15 

Norton v. Larney, 266 U. S. 511 10, 13, 14, 15 

Noxon Chemical Products Co. v. Leckie, 39 F. 2d 318 18 

Rambusch Dec. Co. v. Brotherhood of Painters, etc., 105 F. 2d 

134; cert. den. 308 U. S. 587 8 

Rothschild & Co. v. Marshall, 44 F. 2d 546 12 

Savage v. United States District Court, 144 F. 2d 575 16 

Siler v. Louisville & N. R. Co., 213 U. S. 175 12 

Southern Pac. Co. v. Van Hoosear, 72 F. 2d 903 11 

State of New York, In the Matter of the, 256 U. S. 490 16 

The First National Bank v. Williams, 252 U. S. 504 10 

Young & Jones v. Hiawatha Gin Mfg. Co., 17 F. 2d 193 10 

Statutes 

Act of Congress, July 2, 1890, Sec. 1 3 

Federal Rules of Civil Procedure, Rule 15c 15 

United States Code, Title 26, Sec. 1292 16 

United States Code, Title 28, Sec. 41, Subd. (l)(a) 1 

United States Code, Title 2%, Sec. 41, Subd. (8) 1 

United States Code, Title 28, Sec. 41, Subd. (23) 1 

United States Code, Title 28, Sec. 399 13 

United States Code, Title 28, Sec. 1291 2 

United States Code, Title 28, Sec. 1653 13 14 



No. 12165 
IN THE 



United States Court of Appeals 



FOR THE NINTH CIRCUIT 



South Side Theatres, Inc., et al., 

Appellants, 
vs. 
United West Coast Theatres Corporation, et al., 

Appellees. 



BRIEF FOR APPELLEES. 



STATEMENT OF JURISDICTION. 

A. Jurisdiction of the District Court. 

This action was instituted by the filing of a complaint 
in the United States District Court for the Southern 
District of California, Central Division, by appellees 
United West Coast Theatres Corporation and Fox West 
Coast Agency Corporation on July 1, 1947, seeking a 
declaration of whether or not a certain agreement to which 
they and appellants were parties was in violation of the 
antitrust laws of the United States [R. 2-9]. The basis 
of the jurisdiction of the District Court is the existence 
of a federal question, this being a case arising under the 
laws of the United States. Jurisdiction existed by virtue 
of 28 U. S. C. 41, subdivision (l)(a), 28 U. S. C. 41, 
subdivision (8) and also 28 U. S. C. 41, subdivision (23) : 

"Section 41. Original jurisdiction. The district 
courts shall have original jurisdiction as follows: 

"(1) United States as plaintiff; civil suits at com- 
mon law or in equity. First. Of all suits of a civil 
nature at common law or in equity, brought by the 
United States, or by any officer thereof authorized 



— 2— 

by law to sue, or between citizens of the same State 
claiming lands under grants from different States; 
or, where the matter in controversy exceeds, exclu- 
sive of interest and costs, the sum or value of $3,000,. 
and (a) arises under the Constitution or laws of the 
United States, or treaties made, or which shall be 
made, under their authority, * * * 

"(8) Suits for violation of interstate commerce 
laws. Eighth. Of all suits and proceedings arising 
under any law regulating commerce. 

"(23) Suits against trusts, monopolies, and unlaw- 
ful combinations. Twenty-third. Of all suits and 
proceedings arising under any law to protect trade 
and commerce against restraints and monopolies. 

The allegations of appellees' complaint showing juris- 
diction are contained in paragraphs I, IV, V, VI, IX, XI, 
XII and XIII [R. 2, 3, 5, 7, 8] and are analyzed fully in 
the subsequent portions of this brief. The complaint in its 
entirety is set forth as Appendix A hereto. 

Inasmuch as the jurisdiction of the District Court over 
the subject matter of this action is the fundamental issue 
upon this appeal, a more complete discussion of the court's 
jurisdiction will appear infra. 

B. Jurisdiction of the United States Court 
of Appeals. 

Jurisdiction of this Court is found in 28 U. S. C. Sec- 
tion 1291 : 

'The courts of appeals shall have jurisdiction of 
appeals from all final decisions of the district courts 
of the United States, * * * except where a direct 
review may be had in the Supreme Court." 



— 3— 

STATEMENT OF THE CASE. 

On July 1, 1947, United West Coast Theatres Corpora- 
tion and Fox West Coast Agency Corporation, as plain- 
tiffs, brought an action against South Side Theatres, Inc., 
Marco Wolff, Fanchon Simon, Roy N. Wolff and Rube 
Wolff, joint venturers, doing business under the name of 
South Side Associates, to have declared the rights of the 
parties under a certain contract the provisions of which are 
alleged in plaintiffs' complaint. Shorn of non-essential 
allegations and stripped of surplusage, the complaint con- 
tains the following allegations clearly giving the District 
Court jurisdiction: 

In paragraph I it is alleged that the matter in con- 
troversy, exclusive of interest and costs, exceeds the sum 
of $3,000.00 and arises under the laws of the United 
States, to wit. Section 1 of the Act of Congress of July 2, 
1890, commonly known as the Sherman Act [R. 2]. 

Allegations follow in paragraphs IV and V that plain- 
tiff-appellee United West Coast Theatres Corporation is 
the lessee of the Fifth Avenue Theatre and that defendant- 
appellant South Side Theatres, Inc., is the owner of the 
Alto Theatre [R. 3]. 

In paragraph VI it is alleged that on April 1, 1941, 
plaintiffs entered into a written agreement with defendant 
South Side Theatres, Inc., by the terrms of which said 
theatres were to be operated by plaintiffs and defendant 
South Side Theatres, Inc., as a joint venture for a term 
of ten years beginning April 1, 1941. Under the terms 
of this agreement, as alleged in the complaint, United 
West Coast Theatres Corporation was entitled to 51% of 
the proceeds of the venture and liable for 51% of the 
losses, and South Side Theatres, Inc., was entitled to 49% 
of the profits and liable for 49% of the losses [R. 3, 4]. 



Paragraph IX alleges that a Special Expediting Court 
sitting as the United States District Court for the South- 
ern District of New York in the matter of United States 
of America, plaintiff, v. Paramount Pictures, Inc., et al., 
defendants, Equity No. 87-273, filed an opinion on July 
11, 1946, indicating that certain agreements between own- 
ers of two or more theatres normally in competition were 
illegal and it is further alleged in that paragraph that the 
decree of the court dated December 31, 1946, enjoined the 
defendants in that action 

"From making or continuing to perform pooling 
agreements whereby given theatres of two or more 
exhibitors normally in competition are operated as a 
unit or whereby the business policies of such exhibi- 
tors are collectively determined by a joint committee 
or by one of the exhibitors or whereby profits of the 
'pooled' theatres are divided among the owners ac- 
cording to prearranged percentages. " 

It is further stated that the provisions of the decree 
became effective July 1, 1947 [R. 5, 6]. 

In paragraph XI it is stated that the venture agreement 
is a written contract in which plaintiffs are interested and 
with reference to which plaintiffs desire a declaration with 
respect to the rights or liabilities of the plaintiffs and 
defendants [R. 7]. 

Paragraph XII states that a controversy exists between 
plaintiffs and defendants as to their legal rights and lia- 
bilities and further contains the allegation that : 

"Plaintiffs contend that by reason of the provisions 
of the termination agreement and by reason of the 



— 5— 

provisions of the Decree in United States v. Para- 
mount Pictures, Inc., et al., plaintiffs are no longer 
obliged to and are no longer legally permitted to per- 
form the venture agreement and that performance of 
the venture agreement has been rendered impossible 
and terminated by operation of law." 

There follows in this paragraph the allegation that de- 
fendants contend that plaintiffs are still bound by the 
venture agreement and required to perform the same 
R.7]. i ■ -i ■ >' 

Paragraph XIII alleges that the defendant South Side 
Theatres, Inc., has been tendered the possession of the 
Alto Theatre but that it refuses to take possession thereof 
and the appointment of a receiver is requested to operate 
the Alto Theatre [R. 8]. 

The complaint contains additional allegations, among 
others, in paragraph VII, that on the same date plaintiffs 
and defendants entered into the venture agreement they 
also entered into an agreement providing for the termina- 
tion of the venture agreement upon certain contingencies, 
including the entry of a decree in an action brought by 
the United States of America against any parties to the 
venture agreement requiring or directing the parties to 
terminate the agreement. It is further alleged that plain- 
tiffs served a notice of termination upon the defendant 
South Side Theatres, Inc. 

The District Court thereupon ex parte appointed Frank 
Millan receiver of the Alto Theatre on July 1, 1947 [R. 

17]. 



Defendants filed a return on the order to show cause 
why the appointment should not be made permanent [R. 
18]. In this return the defendants did not challenge the 
existence of a federal question but challenged the pro-- 
priety of the United States District Court for the South- 
ern District of California acting in the matter and made 
the claim that the sole courts having jurisdiction were the 
United States District Court for the Southern District of 
New York and the Supreme Court of the United States 
[R. 18]. 

At the time of the hearing on the order to show cause, 
counsel for the plaintiffs stated the ground upon which 
jurisdiction was based : 

"Our contention in this court, your Honor, and I 
hope I can make it clear, is that we are asking you to 
find that this joint venture agreement under the 
Sherman Act, is illegal. 

"We cite the case in our complaint because it is 
perfectly proper, the Paramount decree, as authority 
for holding that this joint venture agreement in this 
lawsuit is illegal." [R. 108.] 

And later during the hearing: 

"We are not asking this court to construe the ter- 
mination agreement. That is properly a matter for 
the State court. What we are asking this court to 
do is determine the legality or illegality under one of 
the laws of the United States, of this joint venture 
agreement which brought about this situation." [R. 
110.] 



No appeal was taken from the order appointing the 
receiver nor was any other effort made to obtain a review 
of this order by an appellate court. The receiver con- 
tinued to operate the Alto Theatre ; the receiver was recog- 
nized to have been duly appointed by counsel for appel- 
lants [R. 110], and his entering into a wage agreement, 
concerning the Alto Theatre, with a projectionist union 
was approved by appellants' attorneys on or about Febru- 
ary 26, 1948 [R. 51]. 

On September 16, 1948, the receiver filed his final 
report [R. 76], and it was approved by the court and the 
receiver ordered discharged by order dated November 22, 
1948 [R. 90]. Appellants have taken an appeal from the 
order approving the final account of the receiver and 
allowing receiver's fees and attorney's fees [R. 92]. 

Questions Involved. 

The questions involved are (1) whether the District 
Court had jurisdiction of the action for declaratory relief, 
and (2) whether if the complaint is defective in its juris- 
dictional allegations may it now be amended. 



ARGUMENT. 

I. 

The District Court Had Jurisdiction of the Action by. 
Reason of the Existence of a Federal Question. 

Plaintiffs' complaint is set forth in its entirety in 
Appendix A. 

The italicized portions of plaintiffs' complaint, as it is 
presented in Appendix A, clearly present a federal ques- 
tion and vested the District Court with jurisdiction. 

An analogous case is Rambusch Dec. Co. v. Brother- 
hood of Painters, etc., 105 F. 2d 134 (C. C. A. 2), certi- 
orari denied 308 U. S. 587. In the cited case Rambusch 
had an agreement with the Union providing that Ram- 
busch would pay the prevailing wage at the situs of the 
job or the New York wage, whichever might be the higher. 
Rambusch undertook a contract in Roanoke, Virginia, and 
a controversy arose as to whether Rambusch was required 
to pay the New York wage to the Union workers, which 
was higher than the Roanoke wage. Rambusch brought 
an action for declaratory relief, asking that the court de- 
clare that its contract with the Union as to the wage pro- 
vision was illegal, in that it was a violation of the anti- 
trust laws. The court held that there was jurisdiction to 
determine this question, saying at page 136: 

"The petition for a declaration of illegality of a con- 
tract under the anti-trust laws and of unlawful re- 
straint of interstate trade by the defendants does, 
however, present a federal question adequate to give 
the District Court jurisdiction." 

The Supreme Court in General Investment Co. v. N. Y. 
C. R. Co., 271 U. S. 228, held that an action similar to 
the instant case was a suit arising under the laws of the 



United States as to which the District Courts are given 
jurisdiction. This was a suit in equity brought by a 
minority stockholder against the New York Central Rail- 
road Company to enjoin it from dominating and controll- 
ing through stock ownership certain other railroad com- 
panies. The bill in equity alleged that the defendant 
through a consolidation agreement acquired the railroad 
lines of certain other companies and in addition acquired 
large amounts of stock in other competing companies and 
charged that the domination and control of these other 
companies was in violation of the Sherman Antitrust Act. 
While apparently diversity of citizenship existed, the Su- 
preme Court placed jurisdiction directly upon the existence 
of a federal question, saying at page 230: 

"In the bill, as we have shown, the plaintiff at- 
tempts with much detail to set forth a continuing 
violation of the Sherman Anti-trust Act and the 
Clayton Act, asserts that this violation unless re- 
strained will be injurious to the plaintiff and other 
stockholders and prays for relief by injunction. Such 
a suit is essentially one arising under the laws of the 
United States, and, as the requisite value is involved, 
is one of which the district courts are given jurisdic- 
tion." 

It is obvious that the fundamental question in the 
pleading under consideration in General Investment Co. v. 
New York C. R. Co., supra, as in the instant case, was 
the legality of certain agreements under the anti-trust 
laws. The fact that in General Investment Co. v. New 
York C. R. Co., supra, the plaintiff proceeded by an in- 
junction suit whereas here plaintiffs asked for declaratory 
relief is of no significance. 

It is interesting to note that in a very recent case 
seeking determination of a question under the declaratory 



—10— 

relief statute, identical with the question presented in the 
complaint herein, Judge Nordbye in American Amusement 
Co. v. Ludzvig (D. G, Minn.), 82 Fed Supp. 265, 266, 
recognized that jurisdiction existed by reason of the pres- 
ence of a federal question. 

See also : 

The First National Bank v. Williams, 252 U. S. 

504; 
Young & Jones v. Hiawatha Gin Mfg. Co., 17 F. 

2d 193 (D. G, Miss.); 
Carter v. Bramlett, 51 Fed. Supp. 547 (D. C, 

Tex.). 

The theory of jurisdiction under which the plaintiffs 
were proceeding in the case at bar was clearly stated by 
plaintiffs' counsel upon the return of the order to show 
cause why the receivership should not be made permanent, 
as indicated by the excerpts from the transcript of the 
hearing of September 10, 1947, quoted above at page 6 
of this brief [R. 108, 110]. 

Even in a situation where jurisdictional facts are not 
clearly stated in the complaint, if the record dehors the 
complaint indicates a basis for jurisdiction, the court is 
privileged to assume jurisdiction {Norton v. Larney, 266 
U. S. 511, 515). 

A. The Fact That There Are Two Grounds Alleged in Sup- 
port of Plaintiffs' Claim or Cause of Action, One of 
Which May Not Present a Federal Question, Does Not 
Deprive the Court of Jurisdiction. 

In the complaint for declaratory relief herein the termi- 
nation of the venture agreement is predicated on two 
bases, (1) the possible invalidity of the agreement under 
the anti- trust laws and (2) the provisions of the termina- 



—11— 

tion agreement. We may assume that situation (2) above 
does not present a federal question. This does not de- 
prive the court of jurisdiction but on the contrary, being 
so closely allied with the federal question presented, the 
court has jurisdiction to determine (2) even though it 
omits to decide the question covered in (1), supra. In 
Southern Pacific Co. v. Van Hoosear, 72 F. 2d 903 (C. C. 
A. 9), Judge Mack, sitting in the Ninth Circuit, in pass- 
ing upon a similar question, said at page 911 : 

"Federal jurisdiction was based upon the federal 
question presented by an action to recover rates es- 
tablished under the Interstate Commerce Act (49 U. 
S. C. A., §1 et seq.). When the intrastate character 
of the commerce was determined either as res ad- 
judicata or as established by the evidence, no federal 
question remained in the case; jurisdiction to give 
judgment for the intrastate rates must therefore be 
upon the principle that the existence of a substantial 
federal question gave the federal court 'the right to 
decide all the questions in the case, even though it de- 
cided the Federal questions adversely to the party 
raising them, or even if it omitted to decide them at 
all, but decided the case on local or state questions 
only/ " 

The often cited case of Hum v. Oursler, 289 U. S. 238, 
contains a similar statement (p. 246) : 

"The distinction to be observed is between a case 
where two distinct grounds in support of a single 
cause of action are alleged, one only of which presents 
a federal question, and a case where two separate and 



—12— 

distinct causes of action are alleged, one only of 
which is federal in character. In the former, where 
the federal question averred is not plainly wanting in 
substance, the federal court, even though the federal- 
ground be not established, may nevertheless retain 
and dispose of the case upon the non-federal ground; 
in the latter it may not do so upon the non-federal 
cause of action/' (Italics by Court.) 

Another similar holding is Siler v. Louisville & N. R. 
Co., 213 U. S. 175, 191. 

We submit that in the instant case the court had juris- 
diction to determine the controversy either upon the 
ground of the existence of a federal question or upon the 
ground of a non-federal question closely allied with the 
federal question, or upon both grounds. 

The fact that the District Judge at times expressed 
doubt as to the existence of jurisdiction has no more 
significance than the ruminations of any court in arriving 
at the solution of a problem. The opinions of a court 
during the course of proceedings before it or at the conclu- 
sion of them may be consistent, contradictory, clear or 
confused. However, the formal order, decree or judg- 
ment is the instrument representing the Judge's decision. 
(Rothschild & Co. v. Marshall, 44 F. 2d 546, 548 (C. C. 
A. 9).) 

To charge, as appellants have done, that Judge Ben 
Harrison continued in force a receivership with the knowl- 
edge that he had no jurisdiction to act is to impute un- 
warrantedly to a distinguished judge a wilful violation of 
his oath of office. 



—13— 

II. 

If It Be Held That Plaintiffs' Complaint Defectively 
Alleges Jurisdiction, Appellees Request Leave to 
Amend Said Complaint. 

Authority is given by the revision of the Judicial Code 
to amend defective allegations of jurisdiction in appellate 
courts. 28 U. S. C, §1653, states: 

"Amendment of Pleadings to Show Jurisdiction. 

"Defective allegations of jurisdiction may be 
amended, upon terms, in the trial or appellate courts." 

Even before the enactment of the above provision the 
Supreme Court in Norton v. Larney, 266 U. S. 511, 516, 
held that it had the power in effect to amend a bill in 
equity to supply lacking allegations of jurisdiction and to 
show the existence of a federal question. In the cited 
case the court, noting that jurisdiction appeared from the 
entire record, considered the bill in equity as amended to 
conform to the facts and sustained the jurisdiction of 
the lower court. 

In Keene Lumber Co. v. Leventhal, 165 F. 2d 815, 
818 (C. C. A. 1), the Court of Appeals held that it 
had power to permit a party on appeal to amend his com- 
plaint so as to allege jurisdictional facts which were ab- 
sent in his original pleading. The court there proceeded 
under the authority of 28 U. S. C, §399, which permitted 
missing allegations to be supplied by amendment to show 
jurisdiction at any stage of the proceedings in diversity 
cases. 

"§399. Amendments to show diverse citizenship. 
Where, in any suit brought in or removed from any 
State court to any district of the United States, the 



—14— 

jurisdiction of the district court is based upon the 
diverse citizenship of the parties, and such diverse 
citizenship in fact existed at the time the suit was 
brought or removed, though defectively alleged, either 
party may amend at any stage of the proceedings and 
in the appellate court upon such terms as the court 
may impose, so as to show on the record such diverse 
citizenship and jurisdiction, and thereupon such suit 
shall be proceeded with the same as though the di- 
verse citizenship had been fully and correctly pleaded 
at the inception of the suit, or, if it be a removed 
case, in the petition for removal. (Mar. 3, 1915, c. 
90, 38 Stat. 956.)" 

This right has been expanded to include not only diversity 
cases but all other cases by 28 U. S. C, §1653, set forth 
above. However, as pointed out in Norton v. Larney, 
supra, curative amendment to show jurisdiction based upon 
the existence of a federal question was countenanced by 
the Supreme Court even before express statutory sanction 
was given for such procedure. 

In the event permission were given to amend plaintiffs' 
complaint, plaintiffs' amended pleading would be in the 
form submitted in Appendix B. 

The defective allegations of jurisdiction, if they be de- 
fective, are amended in the proposed pleading, Appendix 
B, merely by the deletion of certain portions of the 
original complaint, nothing has been added. 

The proposed amended complaint has been prepared by 
the deletion of paragraphs II, III, VII, VIII, X and a 
portion of XII of the complaint as originally filed by 
plaintiffs. 



—15— 

Such amended pleading would relate back to the date 
of the original pleading under the terms of Rule 15c, 
Federal Rules of Civil Procedure, which provides as 
follows : 

"c. Relation Back of Amendments. 

"Whenever the claim or defense asserted in the 
amended pleading arose out of the conduct, transac- 
tion or occurrence set forth or attempted to be set 
forth in the original pleading, the amendment relates 
back to the date of the original pleading." 

The result of the holdings in both Norton v. Larney, 
supra, and Keene Lumber Co. v. Leventhal, supra, is that 
the amended pleading related back to the date of the 
original pleading. 

Appellants cannot claim surprise or prejudice in oppo- 
sition to such amendment for the reason that the theory 
under which jurisdiction was vested in the District Court 
was clearly announced by plaintiffs' counsel at the hear- 
ing on September 10, 1947, as indicated by the excerpts 
from the transcript of the proceedings set forth at page 
6 of our brief [R. 108, 110]. 

We submit that if the court construe the complaint here- 
in as defectively alleging jurisdiction this is a proper case 
for leave to amend, for the reason among others that ap- 
pellants not only acquiesced in the acts of the receiver but 
gave affirmative approval to his conduct. 

Appellants waited eighteen months before they sought 
a review of the question of whether the District Court 
had jurisdiction. The receiver was appointed by order 
dated July 7, 1947, which order was an appealable one. 



—16— 

26 U. S. C, §1292: 

'The courts of appeal shall have jurisdiction of 
appeals from: 

******** 

"(2) Interlocutory orders appointing receivers, 
* * * » 

If plaintiffs were not satisfied with the remedy of ap- 
peal, the court's jurisdiction could have been challenged 
by an application for a writ of prohibition. 

In the Matter of the State of Nezv York, 256 U. 
S. 490. 

See: 

Savage v. United States District Court, 144 F. 2d 
575 (C. C. A. 9). 

In fact, appellants' counsel recognized the propriety of 
the appointment of the receiver on or about February 26, 
1948, when they approved a wage agreement, pertaining 
to certain of the employees of the Alto Theatre, that the 
receiver had entered into with the Projectionists Union 
[R. 51]. Over the signature of defendants' counsel, who 
are now appellants' counsel, the following statement ap- 
pears : 

"Petition is hereby presented to this Honorable 
Court for approval of the wage scale and working 
agreement executed between the Moving Picture Pro- 
jectionists Local No. 150, International Alliance of 
Theatrical Stage Employees and Moving Picture 
Machine Operators of the United States and Canada, 
and the Alto Theater, through Frank Millan, Re- 
ceiver for the same, didy appointed by order of this 



—17— 

Court, which agreement was executed February 4, 
1948. 

"The agreement provides for an increase in wage 
scales and is the same generally as executed by other 
theaters in this area. 

"The agreement has been examined by William 
Gamble, of the Law Firm of Macfarlane, Schaefer 
& Haun, attorneys for defendants, and by Edward 
J. O'Connor, of the Law Firm of O'Connor & O'Con- 
nor, attorneys for the Receiver, Frank Millan. The 
Agreement, which is attached to and made a part 
of this petition, is approved. 

Macfarlane, Schaefer & Haun 

By William Gamble 

Attorneys for Defendants 

O'Connor & O'Connor 
By Edward J. O'Connor 

Attorneys for Receiver 

"The same is hereby approved: 

Ben Harrison 

United States District Judge" 

[R. 51.] (Emphasis added.) 

At that time we must assume, through the acts of their 
counsel, that defendants were approving the carrying on 
of the business of the Alto Theatre by the receiver and in 
fact it appears that defendants' attorneys recognized the 
receiver to be "duly appointed by order of this court." 

While we are aware that there are statements in opin- 
ions to the effect that where jurisdiction is lacking a re- 
ceiver's expenses cannot be charged to the receivership 
fund, the cases cited by appellants do not- indicate that 



—18— 

any elements of acquiescence were there present. For 

instance in Noxon Chemical Products Co. v. Leckie, 39 

F. 2d 318 (C. C. A. 3), cited at page 19 of appellants' 
brief, the court said at page 319: 

"Without elaboration of the facts set forth in our 
former opinion, on which the judgment therein was 
based, an examination of the record discloses with 
clearness that no subsequent act of the corporation 
could in any way be construed as an approval or rati- 
fication of the proceedings, by which its property was 
wrested from it, without notice or an opportunity to 
be heard." 

In Finneran v. Burton, 291 Fed. 37 (C. C. A. 8), cited 
at page 19 of appellants' brief, the following statement 
appears in the court's opinion at page 39, referring to 
a receivership of the Appliance Company: 

"It must always be kept in mind that the situation 
here is one in which there was no voluntary act on the 
part of the Appliance Company, its officers or direc- 
tors, from which it could be claimed that they had 
voluntarily agreed to the receivership in the state 
court." 

In Burnritc Coal Briquette Co. v. Riggs, 6 F. 2d 226 
(C. C. A. 3), the court stated that even in a situation 
where a receiver was appointed without jurisdiction his 
expenses could properly be charged to the receivership 
funds where acquiescence in the receiver's acts existed on 
the part of those claiming the court was without juris- 
diction. When the case reached the Supreme Court, Burn- 
rite Coal Briquette Co. v. Riggs, 274 U. S. 208, it was 
held that the lower court had jurisdiction to appoint the 
receiver and the question was left open of whether the 
expenses of a receivership might be charged to the re- 



—19— 

ceivership property where jurisdiction was lacking to ap- 
point the receiver. Mr. Justice Brandeis, speaking for the 
court, said at page 214 : 

"We have no occasion to determine whether a Fed- 
eral district court which appoints a receiver in a case 
in which it necessarily lacks jurisdiction of the sub- 
ject-matter, so that jurisdiction cannot be acquired by 
acquiescence, may nevertheless impose upon the cor- 
poration, because of acquiescence, the usual charges 
incident to a receivership. " 

Irrespective of the question of what the proper rule of 
law is with regard to charging receiver's expenses against 
receivership funds where no jurisdiction exists to appoint 
a receiver, the fact that appellants affirmatively approved 
the receiver's acts presents a strong reason for permitting 
plaintiff's complaint to be amended if such amendment is 
necessary in order to show jurisdiction. 

Conclusion. 

We submit that this is a clear case of the existence of 
jurisdiction in the District Court. Jurisdiction existing the 
court had authority to appoint the receiver and his ex- 
penses, fees and expenses of his attorney were accordingly 
a proper charge against the receivership funds. 

The judgment of the District Court should be affirmed. 

Respectfully submitted, 

GURNEY E. NEWLIN, 

Clyde E. Holley, 
George W. Tackabury, 
Frank R. Johnston, 

Newlin, Holley, Sandmeyer & Tackabury, 
Attorneys for Appellees, 



APPENDIX A. 

Complaint for Declaratory Relief. 

Plaintiffs above named complain of the above named 
defendants as follows: 

I. 

The matter in controversy exceeds, exclusive of inter- 
est and costs, the sum or value of three thousand dollars 
($3,000.00), and arises under the laws of the United 
States, to-wit: Section 1 of the Act of Congress of July 
2, 1890, 15 U. S. C. A. sec. 4, entitled "An act to pro- 
tect trade and commerce against unlazvful restraints and 
monopolies/' commonly known as the Sherman Act. 

II. 

At all times herein mentioned, plaintiff, United West 
Coast Theatres Corporation, has been and is now a Cali- 
fornia corporation with its principal place of business in 
the County of Los Angeles, State of California, and plain- 
tiff, Fox West Coast Agency Corporation, has been and 
now is a Delaware corporation doing business in the 
County of Los Angeles, State of California. 

III. 

At all times herein mentioned, defendant, South Side 
Theatres, Inc. has been and now is a California corpora- 
tion with its principal place of business in the County of 
Los Angeles, State of California, and defendant, South 
Side Associates has been and is a joint venture by and 
between Marco Wolff, Fanchon Simon, Roy N. Wolff 
and Rube Wolff, each of whom are residents of the County 
of Los Angeles, State of California. 



— 2— 

IV. 

Plaintiff, United West Coast Theatres Corporation, at 
all times mentioned herein has been and now is the lessee 
of the premises known as the Fifth Avenue Theatre Build- 
ing in which is located the <e Fifth Avenue Theatre" at 
2541 West Manchester Boulevard, Inglewood, California, 

V. 

Defendant, South Side Theatres, Inc. at all times men- 
tioned herein has been and now is the owner of the 
premises known as the Alto Theatre Building in which 
is located the u Alto Theatre' at 8862 South Western 
Avenue, Los Angeles, California. 

VI. 

On or about April 1, 1941, plaintiffs entered into a 
written agreement with defendant, South Side Theatres, 
Inc., pursuant to which the Fifth Avenue and Alto 
theatres and the buildings in zvhich said theatres respec- 
tively arc located, were to be operated by plaintiffs and 
said defendant as a joint venture to be known and desig- 
nated as the "Fifth Avenue and Alto Theatres Venture" 
for a term of ten (10) years beginning April 1, 1941 and 
ending March 31, 1951 and pursuant to which agreement, 
plaintiff, United West Coast Theatres Corporation, became 
entitled to fifty- one per cent (51%) of the proceeds of 
said joint venture and became liable for fifty one-per cent 
(51%) of the losses of said joint venture and the defend- 
ant, South Side Theatres, Inc., became entitled to forty- 
nine per cent (49%) of the profits of said joint venture 
and liable for forty-nine per cent (49%) of the losses 
of said joint venture. Said agreement, made on or about 
April 1, 1941, also provided for the employment of plain- 
tiff, Fox West Coast Agency Corporation, to generally 
supervise the business of the venture for which services 



— 3— 

Fox West Coast Agency Corporation was to receive 
weekly compensation equal to five and one-fourth per 
cent (5%%) of the weekly gross receipts of the venture 
(exclusive of admission taxes or other like taxes on ad- 
missions) . 

VII. 

On or about April 1, 1941 plaintiffs and defendant, 
South Side Theatres, Inc., entered into a written agree- 
ment providing for the termination of the "Fifth Avenue 
and Alto Theatres Venture" upon the happening of cer- 
tain events. A true and correct copy of said agreement is 
attached hereto, made a part hereof, and marked Exhibit 
A. Among the events set forth in said agreement, the 
happening of which would give any part to said agree- 
ment the right to terminate, was and is the entry of a 
Decree in an action brought by the United States of 
America against any party or parties to said agreement 
requiring and directing such party or parties to ter- 
minate or nullify said venture agreement or the effect of 
which would be to subject any of the parties thereto to 
any penalty or damage on account thereof or anything 
done thereunder. For convenience the agreement pur- 
suant to which the venture was created will hereinafter 
be referred to as "the venture agreement" and the agree- 
ment pursuant to which the venture may be terminated 
will hereinafter be referred to as "the termination agree- 
ment." 

VIII. 

On or about March 1, 1944, defendant South Side 
Theatres, Inc. sold, transferred, conveyed and assigned 
to defendant, South Side Associates all of its right, title 
and interest in, to and under the venture agreement, re- 
serving, however, to said South Side Theatres, Inc. all 



— A— 

of its then interest in the real property comprising the 
Alto Theatre Building. 

IX. 

On June 11, 1946 a Special Expediting Court convened 
under the authority of the Expediting Act of February 
11, 1903 (15 U. S. C. A. sec. 29), sitting as the United 
States District Court for the Southern District of New 
York in the matter of United States of America, plaintiff, 
against Paramount Pictures, Inc., et al., defendants, 
Equity Number 87-273, filed an Opinion in which the 
court indicated that certain agreements between ozvners 
of two or more theatres normally in competition zvere 
illegal and the court further stated that "Even if the 
parties to such combinations were not major film pro- 
ducers and distributors, but were wholly independent ex- 
hibitors, such agreements might often be regarded as 
beyond the reasonable limits of restraint allozvance under 
the Sherman Act." On December 31, 1946 said court 
filed its Findings of Fact, including, among other find- 
ings , Number 113, as follozvss "Other forms of operat- 
ing agreements are between major defendants and inde- 
pendent exhibitors rather than between major defendants. 
The effect is to ally two or more theatres of different 
ownership into a coalition for the nullification of com- 
petition between them and for their more effective com- 
petition against theatres not members of the 'pool'/' On 
the same date, December 31, 1946, said court entered a 
Decree enjoining and restraining certain of the defend- 
ants in said action, including Twentieth Century-Fox 



— 5— 

Film Corporation and National Theatres Corporation 
(sometimes erroneously referred to in said Decree as 
c< National Theatres, Inc.". (t From making or continu- 
ing to perform pooling agreements whereby given theatres 
of two or more exhibitors normally in competition are 
operated as a unit or whereby the business policies of 
such exhibitors are collectively determined by a joint 
committee or by one of the exhibitors or whereby profits 
of the 'pooled' theatres are divided among the owners 
according to prearranged percentages." The above quoted 
provisions of said Decree became effective Jidy 1, 1947 . 

X. 

The plaintiffs herein are subsidiaries of Twentieth Cen- 
tury-Fox Film Corporation and National Theatres Cor- 
poration, two of the defendants so enjoined and restrained. 
Plaintiffs are informed and believe and, therefore, allege 
that said venture agreement is an agreement, the perform- 
ance of which is enjoined and restrained by said Decree 
from and after June 30, 1947. Plaintiffs fear that if 
they continue, through said venture or otherwise, to 
operate said Alto Theatre after June 30, 1947, they will 
violate the terms of the Decree referred to earlier in 
this paragraph and will be in contempt of the court mak- 
ing said Decree and will be subjected to penalties therefor. 

XL 

The venture agreement is a written contract in which 
plaintiffs are interested and with reference to zvhich plain- 
tiffs desire a declaration with respect to the rights or lia- 
bilities of plaintiffs and defendants. 



XII. 

An actual controversy relating to the legal rights and 
liabilities of plaintiffs and defendants exists and arises out 
of the following facts: 

On or about June 10, 1947, plaintiffs served upon de- 
fendants a notice of their intention to terminate the ven- 
ture agreement by reason of the happening of certain of 
the events specified in the termination agreement and the 
provisions of the Decree in the matter of United States v. 
Paramount Pictures, Inc., et al. A true and correct copy 
of said notice is attacher hereto, and made part hereof 
and marked Exhibit B. 

On or about June 30, 1947, plaintiffs served upon de- 
fendants a notice terminating said venture agreement, a 
true and correct copy of which is attached hereto, made 
part hereof and marked Exhibit C. Plaintiffs contend 
that by reason of the provisions of the termination agree- 
ment and by reason of the provisions of the Decree in 
United States v. Paramount Pictures, Inc., et al., plain- 
tiffs are no longer obliged to and are no longer legally per- 
mitted to perform the venture agreement and that per- 
formance of the venture agreement has been rendered im- 
possible and terminated by operation of law. 

Defendants contend that regardless of said Decree 
plaintiffs are still bound by said venture agreement and re- 
quired to perform the same in accordance with its terms. 



— 7— 

XIII. 

Defendant, South Side Theatres, Inc., is the owner of 
the Alto Theatre Building and the Alto Theatre located 
therein, referred to in paragraph V hereinabove and for 
some time last past said "Fifth Avenue and Alto Theatre 
Venture" has been operating said theatre. On June 30, 
1947 , plaintiffs tendered the possession of said theatre to 
defendants and requested them to operate the same. De- 
fendants refuse to accept possession of said theatre and 
refuse to operate the same. Said theatre is now closed 
and will remain dark from and after June 30, 1947. Said 
theatre operation has been very profitable, the average 
weekly profits therefrom having been approximately five 
hundred dollars ($500.00). In the event that said theatre 
premises be not operated and said theatre remain dark, not 
only will the anticipated profits from said operation have 
been lost but future profits be impaired by reason of the 
adverse effect upon the community which patronizes said 
theatre and irreparable damage to the operations of said 
theatre will result. The "Fifth Avenue and Alto Theatres 
Venture/' 1609 West Washington Boulevard, Los An- 
geles, California (telephone RE public 4111), although 
having tendered possession to South Side Theatres, Inc. 
and South Side Associates of the real and personal prop- 
erty comprising the Alto Theatre Building, including the 
Alto Theatre located therein, for which a receiver is here- 
in requested, is nozv in actual possession of the same. The 
parties entitled to possession of said real and personal 
property arc South Side Theatres, Inc., and South Side 
Associates, 6838 Hollywood Boulevard, Hollywood, Cali- 
fornia (telephone HEmpstead 3263). 



Wherefore, plaintiffs pray judgment as follows: 

1. That the venture agreement be declared to be termi- 
nated and is of no further force or effect. 

2. That it be decreed that plaintiffs arc no longer 
bound to perform the venture agreement or any part 
thereof. 

3. That the court declare such other rights or duties 
as may be necessary or proper with relation to said agree- 
ment between plaintiffs and defendants. 

4. That a receiver be appointed upon the filing of this 
complaint and permanently thereafter to take charge of 
said Alto Theatre Building, including the Alto Theatre 
located therein, and to operate the theatre business con- 
ducted in said theatre. 

5. That an order to show cause be issued herein re- 
quiring the defendants to appear before this court upon a 
day fixed by said court, then and there to show cause why 
the appointment of a receiver herein should not be made 
permanent. 

6. That the court give such further relief, equitable 
or otherwise, as the court deems proper and necessary 
in the premises. 

7 . For plaintiffs costs herein incurred. 



APPENDIX B. 

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

CENTRAL DIVISION 



Civil Action No. 7282-BH 



United West Coast Theatres Corporation and Fox 
West Coast Agency Corporation, 

Plaintiffs, 

vs. 

South Side Theatres, Inc., and Marco Wolff, Fan- 
chon Simon, Roy N. Wolff and Rube Wolff, Joint 
Venturers, Doing Business Under the Name of South 
Side Associates, 

Defendants. 



Amended Complaint for Declaratory Relief. 



Plaintiffs above named complain of the above named 
defendants as follows: 

I. 

The matter in controversy exceeds, exclusive of inter- 
est and costs, the sum or value of three thousand dol- 
lars ($3,000.00), and arises under the laws of the United 
States, to-wit: Section 1 of the Act of Congress of July 
2, 1890, entitled "An act to protect trade and commerce 
against unlawful restraints and monopolies,' 1 commonly 
known as the Sherman Act. 



—10- 
IL 

Plaintiff, United West Coast Theatres Corporation, at 
all times mentioned herein has been and now is the lessee 
of the premises known as the Fifth Avenue Theatre' 
Building in which is located the "Fifth Avenue Theatre" 
at 2541 West Manchester Boulevard, Inglewood, Califor- 
nia. 

III. 

Defendant, South Side Theatres, Inc., at all times men- 
tioned herein has been and now is the owner of the prem- 
ises known as the Alto Theatre Building in which is 
located the "Alto Theatre" at 8862 South Western Ave- 
nue, Los Angeles, California. 

IV. 

On or about April 1, 1941, plaintiffs entered into a 
written agreement with defendant, South Side Theatres, 
Inc., pursuant to which the Fifth Avenue and Alto theatres 
and the buildings in which said theatres respectively are 
located, were to be operated by plaintiffs and said defend- 
ant as a joint venture to be known and designated as 
the "Fifth Avenue and Alto Theatres Venture" for a 
term of ten (10) years beginning April 1, 1941 and end- 
ing March 31, 1951, and pursuant to which agreement, 
plaintiff, United West Coast Theatres Corporation, be- 
came entitled to fifty-one per cent (51%) of the proceeds 
of said joint venture and became liable for fifty-one per 
cent (51%) of the losses of said joint venture and the 
defendant, South Side Theatres, Inc., became entitled to 
forty-nine per cent (49%) of the profits of said joint 
venture and liable for forty-nine per cent (49%) of the 
losses of said joint venture. Said agreement, made on or 



—11— 

about April 1, 1941, also provided for the employment 
of plaintiff, Fox West Coast Agency Corporation, to gen- 
erally supervise the business of the venture for which 
services Fox West Coast Agency Corporation was to 
receive weekly compensation equal to five and one-fourth 
per cent (5%%) of the weekly gross receipts of the ven- 
ture (exclusive of admission taxes or other like taxes on 
admissions). 

V. 

On June 11, 1946 a Special Expediting Court convened 
under the authority of the Expediting Act of February 
11, 1903 (15 U. S. C. A. sec. 29), sitting as the United 
States District Court for the Southern District of New 
York in the matter of United States of America, plaintiff, 
against Paramount Pictures, Inc., et at., defendants, 
Equity Number 87-273, filed an Opinion in which the 
court indicated that certain agreements between owners of 
two or more theatres normally in competition were illegal 
and the court further stated that kk even if the parties to 
such combinations were not major film producers and 
distributors, but were wholly independent exhibitors, such 
agreements might often be regarded as beyond the rea- 
sonable limits of restraint allowance under the Sherman 
Act." On December 31, 1946 said court filed its Findings 
of Fact, including, among other findings, Number 113, 
as follows: ''Other forms of operating agreements are 
between major defendants and independent exhibitors 
rather than between major defendants. The effect is to 
ally two or more theatres of different ownership into a 
coalition for the nullification of competition between them 
and for their more effective competition against theatres 
not members of the 'pool. 1 ' On the same date, December 



—12— 

31, 1946, said court entered a Decree enjoining and re- 
straining certain of the defendants in said action, includ- 
ing Twentieth Century-Fox Film Corporation and National 
Theatres Corporation (sometimes erroneously referred to 
in said Decree as "National Theatres, Inc.") "From mak- 
ing or continuing to perform pooling agreements whereby 
given theatres of two or more exhibitors normally in com- 
petition are operated as a unit or whereby the business 
policies of such exhibitors are collectively determined by a 
joint committee or by one of the exhibitors or whereby 
profits of the 'pooled' theatres are divided among the 
owners according to prearranged percentages." The 
above quoted provisions of said Decree became effective 
July 1, 1947. 

VI. 

The venture agreement is a written contract in which 
plaintiffs are interested and with reference to which plain- 
tiffs desire a declaration with respect to the rights or lia- 
bilities of plaintiffs and defendants. 

VII. 

An actual controversy relating to the legal rights and 
liabilities of plaintiffs and defendants exists and arises 
out of the following facts : 

Plaintiffs contend that by reason of the provisions of 
the Decree in United States vs. Paramount Pictures, Inc., 
et al, plaintiffs are no longer obliged to and are no longer 
legally permitted to perform the venture agreement and 
that performance of the venture agreement has been ren- 
dred impossible and terminated by operation of law. 

Defendants contend that regardless of said Decree plain- 
tiffs are still bound by said venture agreement and re- 
quired to perform the same in accordance with its terms. 



—13— 

VIII. 

Defendant, South Side Theatres, Inc., is the owner of 
the Alto Theatre Building and the Alto Theatre located 
therein, referred to in paragraph III hereinabove and for 
some time last past said "Fifth Avenue Alto Theatre Ven- 
ture" has been operating said theatre. On June 30, 1947 
plaintiffs tendered the possession of said theatre to de- 
fendant and requested them to operate the same. Defend- 
ants refuse to accept possession of said theatre and refuse 
to operate the same. Said theatre is now closed and will 
remain dark from and after June 30. 1947. Said theatre 
operation has been very profitable, the average weekly 
profits therefrom having been approximately five hundred 
dollars ($500.00). In the event that said theatre premises 
be not operated and said theatre remain dark, not only 
will the anticipated profits from said operation have been 
lost but future profits will be impaired by reason of the 
adverse effect upon the community which patronizes said 
theatre and irreparable damage to the operations of said 
theatre will result. The " Fifth Avenue and Alto Theatres 
Venture," 1609 West Washington Boulevard, Los An- 
geles, California (telephone Republic 4111), although hav- 
ing tendered possession to South Side Theatres, Inc., and 
South Side Associates of the real and personal property 
comprising the Alto Theatre Building, including the Alto 
Theatre located therein, for which a receiver is herein 
requested, is now in actual possession of the same. The 
parties entitled to possession of said real and personal 
property are South Side Theatres, Inc., and South Side 
Associates, 6838 Hollywood Boulevard, Hollywood, Cali- 
fornia (telephone Hempstead 3263). , . 



—14— 
Wherefore, plaintiffs pray judgment as follows: 

1 . That the venture agreement be declared to be termi- 
nated and is of no further force or effect. 

2. That it is decreed that plaintiffs are no longer bound 
to perform the venture agreement or any part thereof. 

3. That the court declare such other rights or duties 
as may be necessary or proper with relation to said agree- 
ment between plaintiffs and defendants. 

4. That a receiver be appointed upon the filing of this 
complaint and permanently thereafter to take charge of 
said Alto Theatre Building, including the Alto Theatre 
located therein, and to operate the theatre business con- 
ducted in said theatre. 

5. That an order to show cause be issued herein re- 
quiring the defendants to appear before this court upon a 
day fixed by said court, then and there to show cause why 
the appointment of a receiver herein should not be made 
permanent. 

6. That the court give such further relief, equitable 
or otherwise, as the court deems proper and necessary in 
the premises. 

7. For plaintiffs' costs herein incurred. 

Newlin, Holley, Sandmeyer & Tackabury, 
By Frank R. Johnston, 

Attorneys for Plaintiffs. 



No. 12165 
IN THE 



United States Court of Appeals 



FOR THE NINTH CIRCUIT 



South Side Theatres, Inc., et ah, 

Appellants, 

vs. 

United West Coast Theatres Corporation, et ah, 

Appellees. 



APPELLANTS' REPLY BRIEF, 



Macfarlane, Schaefer & Haun, 
Henry Schaefer, Jr., 
William P. Gamble, 
James H. Arthur, 
1150 Subway Terminal Building, Los Angeles 13, 

Attorneys for Appellants. 

Russell Hardy, M/\Y 26V 

Of Counsel. 

PAUL P. CBRIEIV^ 



C2.ERK 



Parker & Company, Law Printers, Los Angeles. Phone MA. 6-9171. 



TOPICAL INDEX 

PAGE 

Foreword 1 

I. 

The appellees have not shown that a federal question exists 
which would give the District Court jurisdiction 1 

II. 

Plaintiff cannot now request to amend its complaint in order to 
confer jurisdiction upon the court and thus relieve itself from 
the liability of costs and charges of the receivership when the 
receivership is now terminated 5 



TABLE OF AUTHORITIES CITED 

Cases page 

Boston & M. Consol. Copper & S. Min. Co. v. Mont. Ore Pur- 
chasing Co., 188 U. S. 632, 47 L. Ed. 626 2 

General Investment Co. v. N. Y. C. R. Co., 271 U. S. 228, 70 
L. Ed. 920 2 

Norton v. Larney, 266 U. S. 511, 69 L. Ed. 413 3 

Rambush Dec. Co. v. Brotherhood of Painters, etc., 105 F. 2d 
134 1 

Tennessee v. Union & Planters' Bank, 152 U. S. 454, 38 L. Ed. 
511 2 



No. 12165 
IN THE 



United States Court of Appeals 



FOR THE NINTH CIRCUIT 



South Side Theatres, Inc., et al., 

Appellants, 

vs. 

United West Coast Theatres Corporation, et al., 

Appellees. 



APPELLANTS' REPLY BRIEF. 



Foreword. 

Appellants have no desire to reargue matters set forth 
in their Opening Brief but confine this brief to reply 
to certain matters set forth in Appellees' Brief. 

I. 

The Appellees Have Not Shown That a Federal Ques- 
tion Exists Which Would Give the District Court 
Jurisdiction. 

Appellees have cited cases in their argument under 
Point I which, it is argued, sustain the jurisdiction of the 
District Court by reason of the existence of a Federal 
question. In Rambush Dec. Co. v. Brotherhood of Paint- 
ers, etc., 105 F. 2d 134 (C. C. A. 2), in which the plaintiff 
brought an action for declaratory relief on the grounds 
that the contract was in violation of the anti-trust laws 
and was an unlawful restraint of interstate trade, the 



— 2— 

court rightfully held that the complaint presented a Fed- 
eral question adequate to give the District Court juris- 
diction. There can be no argument with this case as the 
complaint specifically alleged the contract to be in viola- 
tion of the Federal laws. 

The court has universally held that if the plaintiff as- 
serts a right which will be sustained by one construction 
of a Federal law or defeated by another, the case is one 
arising under Federal law and the District Court thus 
has jurisdiction. See : 

Tennessee v. Union & Planters' Bank, 152 U. S. 
454, 38 L. Ed. 511; 

Boston & M. Consol. Copper & S. Min. Co. v. 
Mont. Ore Purchasing Co., 188 U. S. 632, 47 
L. Ed. 626. 

In General Investment Co. v. N. Y. C. R. Co., 271 U. 
S. 228, 70 L. Ed. 920, cited by Appellees, the court states: 

"In the bill, as we have shown, the plaintiff at- 
tempts with much detail to set forth a continuing 
violation of the Sherman Anti-Trust Act and the 
Clayton Act, asserts that this violation unless re- 
strained will be injurious to the plaintiff and other 
stockholders and prays for relief by injunction. Such 
a suit is essentially one arising under the laws of the 
United States, and, as the requisite value is involved, 
is one of which the District Courts are given juris- 
diction/' 

All the other cases cited by Appellants reiterate this 
proposition of law which is without question the rule for 
determining jurisdiction. Appellees, however, have failed 
to show that the complaint has an allegation sufficient to 
bring it within the rule announced by these cases. In 



— 3— 

paragraph Twelfth of plaintiffs' complaint the basis of 
the controversy is stated: 

"Plaintiffs contend that by reason of the provisions 
of the termination agreement and by reason of the 
provisions of the Decree in United States v. Para- 
mount Pictures, Inc., et at., plaintiffs are no longer 
obliged to and are no longer legally permitted to per- 
form the venture agreement and that performance 
of the venture agreement has been rendered impos- 
sible and terminated by operation of law." 

As was stated in Appellants' Opening Brief, the only 
question presented by the complaint is an interpretation of 
the termination agreement in light of the Decree of the 
District Court in United States v. Paramount Pictures, 
Inc., et al., as alleged in the complaint. It is not alleged 
that the agreement set forth in the complaint is in viola- 
tion of any Federal law nor is the construction of any 
Federal law necessary for the determination of the con- 
troversy alleged to exist. The only question presented 
was an interpretation of the terms of the contract in 
light of a decision of a Federal court. Appellees have 
quoted the case of Norton v. Larney, 266 U. S. 511, 69 
L. Ed. 413, to the effect that if the record dehors the 
complaint indicates a basis of jurisdiction the court is 
privileged to assume jurisdiction. It is difficult to under- 
stand how the Appellees could arrive at such a conclu- 
sion when the court states on page 515: 

"It is quite true that the jurisdiction of a Federal 
court must affirmatively and distinctly appear, and 
cannot be helped by presumptions or by argumenta- 
tive inferences drawn from the pleadings. If it does 
not thus appear by the allegations of the bill or com- 
plaint, the trial court, upon having its attention 
called to the defect, or upon discovering it, must 



dismiss the case, unless the jurisdictional facts be 
supplied by amendment. But here no action was taken 
by that court and none was asked by appellant." 

We submit that there is nothing either in or outside' 
of the record to show any facts sufficient to confer juris- 
diction on the Federal court which are not set forth in 
the complaint. The complaint alleges that by reason of 
the agreement the Appellees had a right to terminate the 
contract and by reason of the Decree of the Federal court 
it was necessary for them to terminate the operation of 
the theatres under the joint venture agreement. Appel- 
lees have not asked for nor brought into question any 
interpretation of the anti-trust laws of the United States. 
They have merely requested a declaration that they were 
excused from performance by reason of the terms of the 
contract or by reasons of the decree of a court. In either 
case the question would be determined by an interpreta- 
tion of the contract in light of a decision holding such 
contracts to be invalid. 

In the last paragraph on page 12 of Appellees' Brief, 
the Appellees have expressed themselves in a manner 
which we believe is unwarranted by our statement. We 
have not knowingly charged the Honorable District Judge 
with a wilful violation of his oath of office. We simply 
called to the Court's attention the record. We realize that 
the District Court has not passed on Appellants' motion 
to dismiss and that matter therefore is not before this 
Court to review, as there is no order to review. We 
take the position that there is no jurisdiction in the Dis- 
trict Court for this action, and as we understand the law 
that matter may be raised at any time and we raise it 
specifically in connection with the matters from which we 
have appealed. We believed when we filed our brief, and 
we believe now, that the Court's comments are illuminat- 



—5— 

ing and that his reasoning is particularly apt. It is in- 
teresting to note that another District Judge held much 
the same views as Judge Harrison held. The record from 
page 100 to page 124 gives the full discussion of what 
transpired and the comments of the Court, and we think 
that it is important because the Court reasoned the mat- 
ter aloud for the benefit of counsel, and we believe his 
reasoning to be correct, namely, that it was a matter 
for the State Court. 

II. 
Plaintiff Cannot Now Request to Amend Its Com- 
plaint in Order to Confer Jurisdiction Upon the 
Court and Thus Relieve Itself From the Liability 
of Costs and Charges of the Receivership When 
the Receivership Is Now Terminated. 

From the commencement of the receivership until its 
termination, plaintiff made no effort or request to the 
trial court to amend its pleadings so as to confer juris- 
diction upon the Federal court. Now, after the receiver- 
ship has been terminated the Appellees request the Ap- 
pellate Court to amend the pleadings in order to relieve 
them from the payment of costs of receivership which 
during its entire existence was operating under a void 
order of court. Further it is noted that in paragraph 
Seventh of the proposed amendment as set forth on page 
12, Appendix A of Appellees' Brief it is stated: 

"Plaintiffs contend that by reason of the provi- 
sions of the Decree in United States v. Paramount 
Pictures, Inc., et al., plaintiffs are no longer obliged 
to and are no longer legally permitted to perform 
the venture agreement and that performance of the 
venture agreement has been rendered impossible and 
terminated by operation of law." 



The effect of this amendment is to eliminate the right 
to terminate by reason of the provisions of the agreement 
and places the right to terminate squarely on the inter- 
pretation of a Decree of another court. The effect of this 
amendment is neither to strengthen nor weaken the posi- 
tion as set forth in the original complaint nor can Ap- 
pellees after approximately twenty months seek to amend 
their complaint in order to void charges which should be 
made against them by reason of their action in appoint- 
ing a receiver in a court which was without jurisdiction. 

The Appellees' attempt to avoid their responsibility by 
stating that the Appellants acquiesced in the appointment 
of the receiver. Appellees have apparently pointed out 
that on the initial return on order to show cause [R. 18] 
the Appellants raised the question of the jurisdiction of 
the court and continued to assert the lack of jurisdiction 
at every possible opportunity and that the Appellants 
made a motion to dismiss the action [R. 49] on the 
grounds that the court was without jurisdiction, which 
motion to dismiss has not been ruled upon by the trial 
court. Appellees attempt to show acquiescence by the 
approval by the attorneys for the Appellants of a work- 
ing agreement between a union representing the theatre 
employees and the receiver. In order to keep the theatre 
oprating and to prevent loss by all parties it was neces- 
sary that the wage agreement attached to the petition for 
approval be made. [R. 51 to 66.] There is nothing in 
the approval of the union contract which could be con- 
strued as an acquiescence in the receivership. Appellees 
cite no cases which support their contention that acts 



done by Appellants could be construed as an approval or 
ratification of the receivership proceedings. The cases 
cited hold to the contrary. 

It is respectfully submitted that the arguments of the 
Appellants in their Opening Brief and Reply have estab- 
lished that the court was without the jurisdiction to ap- 
point a receiver and that his expenses, fees and expenses 
of his attorney were accordingly not a proper charge 
against receivership funds and should be borne by Ap- 
pellees. 

Respectfully submitted, 

Macfarlane/ Schaefer & Haun, 
Henry Schaefer, Jr., 
William P. Gamble, 
James H. Arthur, 

Attorneys for Appellants. 

Russell Hardy, 
Of Counsel. 



No. 12165, 
IN THE 



United States Court of Appeals 



FOR THE NINTH CIRCUIT 



South Side Theatres, Inc., et al., 

Appellants, 

vs. 

United West Coast Theatres Corporation, et al., 

Appellees. 



PETITION FOR REHEARING. 



Macfarlane, Schaefer & Haun, 
Henry Schaefer, Jr., 
William P. Gamble, 
James H. Arthur, 
1150 Subway Terminal Building, Los Angeles 13, 
Attorneys for Appellants. 






Russell Hardy, jmN ^ ]95 q 

Of Counsel. 



PAUL P. O'BRIEN, -v 

sum 



Parker & Company, Law Printers, Los Angeles. Phone MA. 6-9171. 



TABLE OF AUTHORITIES CITED 

Cases page 

General Investment Co. v. N. Y. C. R. Co., 271 U. S. 228, 70 
L. Ed. 920 4 

Norton v. Larney, 266 U. S. 51, 69 L. Ed. 413 5 

The Rambusch Decorating Co. v. Brotherhood of America, 105 
F. 2d 134 4 



No. 12165. 
IN THE 



United States Court of Appeals 



FOR THE NINTH CIRCUIT 



South Side Theatres, Inc., et al., 

Appellants, 

vs. 

United West Coast Theatres Corporation, et al., 

Appellees. 



PETITION FOR REHEARING. 



The Appellants respectfully present herewith their Pe- 
tition for Rehearing on the grounds that the decision of 
the Court is based upon the proposition that the complaint 
raised the issue whether the venture agreement violated 
the Sherman Anti-Trust Act. This Court said that there 
was "a substantial controversy with reference to the va- 
lidity of the joint venture agreement under the Sherman 
Act" and was an issue within the jurisdiction of the Court 
below. The Appellants contend that said issue was not 
raised by the allegations of the complaint and submit here- 
with their argument in support thereof as follows: 

The complaint, alleged that that issue had been decided 
by the United States District Court for the Southern Dis- 
trict of New York, and that the judgment of that Court in 
another case applied to and enjoined the performance of 
the agreement. No attack on the validity or application 
of that judgment was made by Appellees in the Court 



— 2— 

below in this case. No allegations to the effect that the 
agreement was not violative of the Sherman Act, have 
been made or were intended by Appellees in the Court 
below. They have not contended in that Court nor in this 
Court, that the agreement was not unlawful, as decided by 
the New York Court, nor that it was not enjoined for 
that reason. In the Court below, they have not sought to 
renew and to relitigate that issue, nor to have that Court 
reconsider, review, reverse or affirm that judgment. At 
least formally, Appellees have accepted that judgment as 
valid, applicable, conclusive and final in this case. 

That being so, what is the real issue raised by the com- 
plaint? While the complaint clearly eliminates any issue 
as to the legality of the agreement under the Sherman Act, 
it fails to show with any clarity what the real issue is. 
The definition of that issue, therefore, requires inference 
and deduction from very indefinite material. Appellees 
seem to ask the Court to decide what are the rights and 
liabilities of the parties under the contract as between 
themselves, accepting the contract as violative of the Sher- 
man Act and validly enjoined. Another question, not so 
indefinitely stated, is whether Appellees are longer bound 
to perform the agreement. 

The rights and liabilities of parties to a contract, es- 
pecially one which has been held to be unlawful and has 
been enjoined, arise out of the general law and not from 
the Sherman Act nor from any other federal statute. The 
Sherman Act does not declare, as to contracts which it 
condemns, the rights of the parties as between themselves, 
especially after the contract has been condemned and en- 
joined. The question whether Appellees are longer bound 
to perform the agreement, has been conclusively and finally 
settled by the New York Court which entered the injunc- 
tion. The Court below was, therefore, in effect necessa- 



— 3— 

rily asked to reverse, affirm, modify or otherwise change 
that judgment. That was asking the Court below to ex- 
ercise an appellate jurisdiction as to the judgment of the 
New York Court, or to treat that judgment as a legislative 
enactment, not based on the facts of the case tried and 
decided by the New York Court, but containing a general 
rule to be applied as a statute to original specific instances 
arising throughout the country. 

If the Court below had jurisdiction because the case was 
one arising under the Sherman Act, that jurisdiction was 
as broad, complete and unlimited as that of the New York 
District Court in the case in which the judgment was 
entered. It was precisely the same jurisdiction as that of 
the New York Court, unaffected and unlimited by the fact 
that the New York Court had tried, decided, and entered 
a judgment in the case. 

If the Court below had any jurisdiction at all in the 
case, that jurisdiction included the power and duty to 
reach a decision as an original proposition, independently 
of and unaffected by the fact that the New York District 
Court had dealt with the same subject and had enjoined 
the agreement. That jurisdiction would have included the 
right to reach an opposite decision, and included the corol- 
lary authority to enter a judgment in effect authorizing 
the Appellees to disregard and disobey the judgment of 
the New York Court. 

Such a jurisdiction would produce chaos in the admin- 
istration of the antitrust laws by the courts and by the 
Department of Justice, and would effectually nullify in- 
junctions against monopoly and restraint of trade prac- 
tices and conditions, which usually extend throughout very 
wide areas of the country and are not confined to one 
judicial district. Such would be the effect with regard to 



— 4— 

the judgment involved here, because it undertakes to end 
monopoly practices and conditions by a system of uniform 
injunctive provisions nationwide in scope. Such a juris- 
diction could produce as many variations in the enforce- j 
ment of and as many exceptions to, and exemptions from, 
the judgment of the New York Court as there are federal 
judicial districts in the United States. Enjoined monopo- 
lizers would not hesitate to exploit that opportunity. 

The complaint did not even involve a controversy re- 
specting the validity, construction and effect of the judg- 
ment of the New York Court. If it had involved such a 
question, that might have been a question involving the 
validity, construction and effect of the Sherman Act. But 
that question, if involved in this case, was in its very 
nature an appellate question, and was not one arising 
within the original jurisdiction of the Court below. The 
important limitation in the jurisdiction statute is that the 
district court shall have original jurisdiction only. 

It has not been the contention of the Appellants that a 
complaint questioning as an original proposition the va- 
lidity of a contract under the antitrust laws as an unlawful 
restraint of trade, does not present a question within the 
jurisdiction of a District Court. In The Rambitsch Deco- 
rating Co. v. Brotherhood of America, 105 F. 2d 134 
(C. C. A. 2d), and General Investment Co. v. N. Y. C. R. 
Co., 271 U. S. 228, 70 L. Ed. 920, cited by this Court and 
by Appellees, no judgment of a coordinate Court which 
had previously adjudicated the character of the contracts 
as violative of law, was involved, as was the fact in this 
case. Instead, in those cases the complaint set forth facts 



— 5— 

showing unlawful conduct, and the Court was asked to 
decide as to its validity, as an original independent ques- 
tion in the exercise of original jurisdiction. 

Jurisdiction must affirmatvely and distinctly appear in 
the pleadings. In Norton v. Larney, 266 U. S. 51, 69 
L. Ed. 413, it was held that presumptions or argu- 
mentative inferences drawn from the pleadings, may not 
be the basis of jurisdiction. It would follow that the basis 
of jurisdiction may not be found in an interpretation of 
the pleadings in an argument on a motion to dismiss. 

It will be noted from the complaint [R. 2] that in para- 
graph I the Appellees set forth the grounds upon which 
they claim jurisdiction is based; but in the statement of 
the claim upon which the pleader is entitled to relief, there 
is no reference to the Sherman Act, except a quotation 
from the opinion of the New York Court found in para- 
graph IX of the complaint [R. 5]. There is no allega- 
tion that the Appellees contend that the contract is in 
violation of the Sherman Act. There is no allegation by 
inference or otherwise that the contract is claimed by 
Appellees to be illegal under the Sherman Act. 

In the demand for relief the Appellees make no claim 
that the contract is illegal or otherwise. In fact, they 
raise no issue as to its legality or illegality in any respect 
whatsoever. 

The Appellants respectfully request that the Court re- 
consider its opinion in this case; for to uphold the com- 
plaint in this case would be to have federal jurisdiction 
depend on mere formal allegations that the controversy 



arises under the laws of the United States, in any com- 
plaint whose specific allegations and specific prayers not 
only make no reference nor statement to a subject to 
which any law of the United States is applicable, but 
show the contrary to be true. 

Respectfully submitted, 

Macfarlane, Schaefer & Haun, 
Henry Schaefer, Jr., 
William P. Gamble, 
James H. Arthur, 

By Henry Schaefer, Jr., 

Attorneys for Appellants. 

Russell Hardy, 
Of Counsel. 



Certificate of Counsel. 

It is hereby certified by counsel for the Appellants that 
in our judgment the Petition submitted herewith is well 
founded and is not interposed for delay. 

Henry Schaefer, Jr. 



No. 12,166 

IN THE 

United States Court of Appeals 
For the Ninth Circuit 



Basil Banghart, 

vs. 



Appellant, 



E. B. Swope, Warden, United States 
Penitentiary, Alcatraz Island, Cali- 
fornia, 

Appellee. 



BRIEF FOR APPELLEE. 



Frank J. Hennessy, 

United States Attorney, 

Joseph Karesh, 

Assistant United States Attorney, 
Post Office Building. San Francisco 1, California, 

Attorneys for Appellee. 

- 1 m 



PEnKAn.Wiisn Ptjt-vtttwo nn C!tv TTt»ai 



»AUL P, O'BRIEftl, 

OLERK 



Subject Index 

Page 

Jurisdictional Statement 1 

Facts of the Case 2 

Question Involved 3 

The Judgment and Sentence 3 

Argument 4 

Conclusion 7 



Table of Authorities Cited 



Cases Pages 

Harrison v. Snook, Warden, (CCA-5) 22 Fed. (2d) 169 5 

Hunter v. Martin, decided May 24, 1948, 334 U.S. 302 6 

In re Wright, 51 Fed. Supp. 639 6 

Johnston v. Wright, (CCA-9) 137 Fed. (2d) 914 6 

Mahoney v. Johnston, (CCA-9) 144 Fed. (2d) 663 5, 6 

McNally v. Hill, 293 U.S. 131 6 

Statutes 

18 U.S.C.A., Section 753 (f) 5 

28 U.S.C.A, Sections 2241, 2243, 2253, 2255 1 



No. 12,166 

IN THE 

United States Court of Appeals 

For the Ninth Circuit 



Basil Banghart, 


Appellant, 


vs. 




E. B. Swope, Warden, 


United States f 


Penitentiary, Alcatraz Island, Cali- 


fornia, 


Appellee. 



BRIEF FOR APPELLEE, 



JURISDICTIONAL STATEMENT. 
This is an appeal from an order of the United 
States District Court for the Northern District of 
California (hereinafter called the " court below"), 
denying appellant's petition for writ of habeas corpus 
(T. 46). The District Court had jurisdiction over the 
habeas corpus proceedings under Title 28 U.S.C.A. 
Sections 2241, 2243 and 2255. Jurisdiction to review 
the order of the District Court denying the petition is 
conferred upon this Honorable Court by Title 28 
U.S.C.A. Section 2253. 



FACTS OF THE CASE. 

The appellant, an i innate of the United States Peni- 
tentiary at Alcatraz, California, filed a petition for a 
writ of habeas corpus in which he contended that the 
trial judge fixed his place of confinement as the Il- 
linois State Penitentiary at Menard, Illinois, and that 
the Attorney General had no power to order his re- 
moval to the United States Penitentiary at Alcatraz, 
California, so long as his Illinois sentence was in full 
force and effect (T. 1-20). The Court below issued an 
order to show cause (T. 21). The appellee filed a 
return to the order to show cause (T. 22-23) and the 
appellant then filed a pleading entitled: "Traversing 
Respondent's Return to the Order to Show Cause" 
(T. 34-45). The matter was submitted, and the Court 
thereafter entered the following order denying the 
petition for writ of habeas corpus and dismissing the 
proceedings. 

"Upon the filing of petitioner's petition for the 
writ of habeas corpus, the Court issued an order 
requiring the respondent to show cause why the 
writ should not issue. Prom the petition, respond- 
ent's return to the order to show cause and peti- 
tioner's traverse to the return, it is clear that no 
factual issue is tendered and that the petition may 
be determined on its face as a matter of law. 

"The petitioner is now lawfully in the custody 
of the respondent and is not entitled to release 
from such custody. Mahoney v. Johnston, 9 Cir. 
144 Fed. (2d) 663; McNally v. Hill, 293 U. S. 
131. 



"The petition is denied and the proceeding is 
dismissed. 

Louis E. Goodman, 
United States District Judge. 

Dated : December 7, 1948. 

(Indorsed:) Filed Dec. 7, 1948. 

C. W. Calbreath, Clerk/ ' 

From this order appellant now appeals to this Hon- 
orable Court (T. 47). 



QUESTION INVOLVED. 

Is the appellant now properly in the custody of the 
appellee ? 



THE JUDGMENT AND SENTENCE. 

The pertinent portion of the judgment and sentence 
entered on May 15, 1934, in the Western District of 
North Carolina, Asheville Division, under which the 
appellant is now imprisoned in the United States 
Penitentiary at Alcatraz Island, California, reads as 
follows : 

" Ordered and Adjudged that the defendant, 
having been found guilty of said offenses, is here- 
by committed to the custody of the Attorney Gen- 
eral or his authorized representative for im- 
prisonment for the period of FIVE YEARS on 
Count No. 1, TWENTY FIVE YEARS on Count 
No. 2, TWO YEARS on Count No. 12, TWO 
YEARS on Count No. 3, TWO YEARS on Count 



No. 4, these sentences to run consecutively mak- 
ing a total of THIRTY SIX YEARS. 

"It appearing to the Court that the defendant, 
Banghart, is now under sentence from Cook 
County, State of Illinois, for a term of NINETY 
NINE years imposed by the State Court of Il- 
linois, it is ordered that the defendant Banghart 
be returned to the custody of the Warden of the 
State Prison, at Menard, Illinois, for the comple- 
tion of his sentence and that the above sentence is 
to run concurrently with the sentence of NINETY 
NINE YEARS." 1 (T. 15-16.) 



ARGUMENT. 

Appellant contends, as above indicated, that the 
trial judge fixed the place of his confinement as the 
Illinois State Penitentiary at Menard, Illinois, and 
that the Attorney General had no power to order his 
removal to the United States Penitentiary at Alcatraz, 
California, so long as his Illinois sentence was in full 
force and effect, even though by his own admission 
he had escaped from the Illinois State Penitentiary 
at Joilet, Illinois, on October 9, 1942. There is no 
merit in this contention. It should be noted from the 
transfer order attached to the return to order to show 
cause (T. 29-30) that the Attorney General on Janu- 
ary 2, 1943, directed that such transfer to the United 
States Penitentiary at Alcatraz be from the Illinois 
State Penitentiary at Joliet. It is thus apparent that 



! The sentence of thirty six years was on October 19, 1944, re- 
duced to 31 years. (T. 31-32.) 



such transfer was with the consent of the Illinois 
State officials; that the Attorney General desired the 
appellant to serve the balance of his Federal sentence 
in Alcatraz, a maximum security institution, rather 
than in an Illinois State Penitentiary from which he 
escaped is understandable. Under the applicable 
statute, 18 U.S.C.A. Section 753 (f), 2 the trial Court 
had power to designate the term of imprisonment 
and the type of institution in which the sentence 
was to be served but not the place of confinement. 
In fixing the time of imprisonment as concurrent with 
the State sentence, the trial Court did impose a con- 
dition which had the incidental effect of requiring 
that appellant serve his Federal sentence in the State 
penitentiary during the time that he was held by the 
State authorities, but the trial Judge did not have the 
power under Title 18 U.S.C.A. Section 753(f) to 
designate the State penitentiary as the only place of 
confinement for the duration of the Federal sentence. 
Mahoneij v. Johnston (OCA-9), 144 F. (2d) 
663. 

The case of Harrison v. Snook, Warden (CCA-5), 
22 F. (2d) 169, upon which appellant relies, is inap- 
plicable, for it involved a sentence imposed prior to 
the enactment of 18 U.S.C.A. Section 753 (f ) in 1930, 
at a time when District Courts had power to designate 
a state penitentiary as the place of confinement. The 
release of appellant by the State authorities did 
not affect the term of his Federal sentence, and 



J See Appendix, 



upon such release the Attorney General under the 
statute had power to designate a Federal penitentiary 
as a place where appellant should serve the balance 
of his Federal sentence. The Alcatraz Record of Court 
Commitment shows that appellant's Federal sentence 
began to run on May 15, 1934, the date on which the 
trial Court originally imposed judgment. Appellant 
has not yet completed service of his sentence, which 
as above indicated was reduced from 36 years to 31 
years. After he has served this sentence of 31 years, 
and the Illinois authorities exercise their detainer 
against him and take him into custody to complete 
the service of his 99 year state sentence, he can re- 
quest credit on the state sentence for the time he 
served in Federal prison. That question is, however, 
one for the Illinois authorities and is not pertinent 
to these proceedings. 

The holding in the case of In re Wright, 51 Fed. 
Supp. 639 (affirmed Johnston v. Wright (CCA-9), 137 
Fed. (2d) 914), on which the appellant also relies, was 
overruled by the Supreme Court of the United States 
in Hunter v. Martin, decided May 24, 1948, 334 IT. S. 
302. 

Thus, as the Court below stated in its order denying 
the petition for writ of habeas corpus, after citing 
Mahoney v. Johnson, supra, and McNally v. Hill, 
293 U. S. 131, on which appellee herein also relies, 
the appellant is now lawfully in the custody of the 
appellee, and is not entitled to release from such 
custody. 



CONCLUSION. 

In view of the foregoing, it is respectful/ urged 
that the order of the Court below is correct and should 
be affirmed. 

Dated, San Francisco, California, 
March 31, 1949. 

Prank J. Hennessy, 

United States Attorney, 

Joseph Karesh, 

Assistant United States Attorney, 

Attorneys for Appellee. 
(Appendix Follows.) 






Appendix. 



Appendix 

Section 7 of the Act of May 14, 1930, C. 274, 46 
Stat. 326 (18 U.S.C.A. 753 (f)), read as follows at the 
time of petitioner's conviction: 

"All persons convicted of an offense against 
the United States shall be committed, for such 
. terms of imprisonment and to such types of insti- 
tutions 1 as the court may direct, to the custody 
of the Attorney General of the United States or 
his authorized representative, who shall designate 
the places of confinement where the sentences of 
all such persons shall be served. The Attorney 
General may designate any available, suitable, 
and appropriate institutions, whether maintained 
by the Federal Government or otherwise or 
whether within or without the judicial district 
in which convicted. The Attorney General is also 
authorized to order the transfer of any person 
held under authority of any United States statute 
from one institution to another if in his judg- 
ment it shall be for the well-being of the prisoner 
or relieve over-crowded or unhealthful conditions 
in the institution where such prisoner is confined 
or for other reasons. The authority conferred 
upon the Attorney General by this section shall 
extend to persons committed to the National 
Training Shool for Boys, by the juvenile court 
of the District of Columbia, as well as to those 
committed by any court of the United States." 



1 The phrase "and to such types of institutions" was deleted 
Dy the Act of June 14, 1941, C. 204, 55 Stat. 252. That act and 
the Act of October 21, 1941, C. 453, 55 Stat. 743, also amended 
Section 7 in other respects not material here. (See 18 U.S.C.A. 
Supp. Ill 753(f)). 



No. 12169 



Itttftfc States 

(totri nf KppmU 

tot % Nintif Oforwtt 



THE ATCHISON, TOPEKA AND SANTA FE 
RAILWAY COMPANY, 

Appellant, 



vs. 



CLARA BROWN, a Minor, by Jesse J. Brown, 
Her Guardian, ad litem, 

Appellee. 



SrattBtripi *rf 3tort> 



Appeal from the United States District Court 

for the Southern District of California 

Central Division 



MAR 2 8 WW 

PAUL P. P'BRIEflCV^ 



QLERK 



Typo Press, 1017 California Drive, Burlingame, Calif. 3—22—49 



No. 12169 



United States 

(tatrt of Appeals 

for % Nutti* <Eirnrtt 



THE ATCHISON, TOPEKA AND SANTA FE 
RAILWAY COMPANY, 

Appellant, 



vs. 



CLARA BROWN, a Minor, by Jesse J. Brown, 
Her Guardian, ad litem, 

Appellee. 



Snmarripi of ftmxvb 



Appeal from the United States District Court 

for the Southern District of California 

Central Division 



INDEX 

[Clerk's Note: When deemed likely to be of an important nature, 
errors or doubtful matters appearing in the original certified record 
are printed literally in italic; and, likewise, cancelled matter appear- 
ing in the original certified record is printed and cancelled herein 
accordingly. When possible, an omission from the text is indicated by 
printing in italic the two words between which the omission seems 
to occur.] 

PAGE 

Answer 20 

Answer to Amended Complaint 27 

Amended Complaint for Damages 22 

Appeal : 

Certificate of Clerk to Transcript of Record 
on (SC) 18 

Certificate of Clerk to Transcript of Record 
on (DC) 35 

Designation of Points on (USCA) 41 

Notice of 31 

Statement of Points on (DC) 32 

Bond on Removal 12 

Certificate of Clerk to Transcript of Record on 
Appeal (SC) 18 

Certificate of Clerk to Transcript of Record on 
Appeal (DC) 35 

Complaint for Damages 2 

Designation of Points on Appeal (USCA) 41 



11. 

PAGB 

Minute Orders of Superior Court 15 

Names and Addresses of Attorneys 1 

Notice of Appeal 31 

Notice of Hearing on Petition for Removal 7 

Order Appointing Guardian Ad Litem 7 

Order of Removal 16 

Affidavit of Service of 17 

Order Remanding Cause to State Court 30 

Petition and Order for Appointment of Guardian 
Ad Litem 5 

Petition for Removal 8 

Statement of Points on Appeal (DC) 32 

Transcript of Proceedings 36 



NAMES AND ADDRESSES OF ATTORNEYS 

For Appellant: 

ROBERT W. WALKER, 
J. H. CUMMINS, 
J. B. KRAMER, 

448 Santa Fe Building, 
Los Angeles 14, Calif. 

For Appellee: 

CLAUDE A. WATSON, 
EDWARD P. HART, 

5937 Monterey Road, 
Los Angeles 42, Calif. 

and 

SAMUEL P. YOUNG, 

. 715 Black Bldg., 
357 S. Hill St., 
Los Angeles 13, Calif. [1*] 



* Page numbering appearing at foot of page of original certified 
Transcript of Record. 



2 The A. T. & S. F. Ry. Co. 

In the Superior Court of the State of California 
In and for the County of Los Angeles 

No. 524754 

CLARA BROWN, a minor, by Jesse J. Brown, her 
guardian ad litem, 

Plaintiff, 
vs. 

ATCHISON, TOPEKA & SANTA FE RAIL- 
WAY CO., a corporation, T. F. ROBINSON, 
John Doe, Jane Doe, and Doe Company, a cor- 
poration, 

Defendants, 

COMPLAINT FOR DAMAGES 

(Personal Injuries) 

Plaintiff complains of defendants, and for cause 
of action alleges as follows: 

I. 

That the above named Clara Brown is a minor 
of the age of 15 years, and brings this action by and 
through Jesse J. Brown, her guardian ad litem, 
heretofore appainted guardian ad litem by an order 
of the above entitled court. 

II. 

That the true names of the defendants John Doe, 
Jane Doe, and Doe Company, a corporation, are 
unknown to the plaintiff at this time, but when the 
same are ascertained, plaintiff will ask leave of 
the court to substitute such true names in place 
thereof. 



vs. Clara Brown, Etc. 3 

III. 

That at all times herein mentioned, the Atchison, 
Topeka and Santa Fe Railway Co., is a corporation, 
duly organized and existing under the laws of the 
State of Kansas, and said corporation owns and 
operates a general railroad transportation business 
in the County of Los Angeles, more particularly, 
along a certain track and right of way running in 
a general easterly and westerly direction across 
Avalon Boulevard aproximately ten feet north of 
the northerly curb line of Slauson Avenue within 
the City of Los Angeles, County of Los Angeles, 
State of California. [2] 

IV. 

That at all times herein mentioned Avalon Boule- 
vard was and is a public thoroughfare in the City 
of Los Angeles, County of Los Angeles and State 
of California, running in a general northerly and 
southerly direction, intersecting Slauson Avenue, 
also a public thoroughfare in said City, County 
and State. 

V. 

That on June 13th, 1946, at about the hour of 
5:55 p. m. on said day, plaintiff Clara Brown 
alighted from a southbound Los Angeles Transit 
Lines streetcar, which had stopped immediately 
north of the said railroad tracks owned and oper- 
ated by the defendant Atchison, Topeka & Santa 
Fe Railway Co., and that said plaintiff was walking 
toward the public sidewalk on the west side of said 
Avalon Boulevard, at which time and place the 



4 The A. T. & S. F. Ry. Co. 

said defendant, through its agents, servants and 
employees, acting within the scope of their em- 
ployment, so negligently, carelessly and recklessly 
operated a certain switch engine No. 2319, west- 
bound on said railroad tracks, as to cause the same 
to collide with the plaintiff and drag her a distance 
of one hundred nine feet (109'). 

VI. 

That by reason of the negligent acts of said de- 
fendant in the operation of said train on said rail- 
road tracks at said time and place aforementioned, 
plaintiff Clara Brown sustained bodily injuries 
which required the amputation of her right leg, 
and that plaintiff was also injured about her face, 
head and body, all of which injuries are permanent 
in character and progressive in nature. That by 
reason of said bodily injuries, plaintiff has been 
damaged in the sum of One Hundred Thousand 
Dollars ($100,000.00). 

Wherefore, plaintiff prays judgment against the 
defendants as follows: 

1. For general compensatory damages in the 
sum of One Hundred Thousand Dollars 
($100,000.00). [3] 

2. For costs of suit herein incurred. 

3. For such other and further relief as the court 
may deem just in the premises. 

CLAUDE A. WATSON and 
EDWARD P. HART. 
By EDWARD P. HART, 

Attorneys for Plaintiff. 



vs. Clara Brotvn, Etc. 5 

State of California, 
County of Los Angeles — ss. 

Jesse J. Brown, guardian ad litem of Clara 
Brown being by me first duly sworn, deposes and 
says: that he is the guardian ad litem of Clara 
Brown, plaintiff in the above entitled action; that 
he has read the foregoing complaint for damages 
and knows the contents thereof; and that the same 
is true of his own knowledge, except as to the mat- 
ters which are therein stated upon his information 
or belief, and as to those matters that he believes 
it is true. 

CLARA BROWN, 

By JESSE J. BROWN, 

Her Guardian ad Litem. 

Subscribed and sworn to before me this 29th day 
of January, 1947. 

(Seal) CHARLES D. CUTLER, 

Notary Public in and for the County of Los An- 
geles, State of California. 
My Commission Expires June 16, 1950. 

[Endorsed] : Filed Jan. 29, 1947. [4] 



[Title of Superior Court and Cause.] 

PETITION AND ORDER FOR APPOINTMENT 
OF GUARDIAN AD LITEM 

The petition of Clara Brown respectfully shows 
to the court: 



6 The A. T. & 8. F. Ry. Co. 

I. 

That your petitioner, Clara Brown, is a minor, 
who is fifteen years of age, residing with Jesse J. 
Brown, her father, at Los Angeles, California, and 
that she has no general or testamentary guardian. 

II. 

Said minor has a cause of action against defend- 
ants, and each of them, upon which her best inter- 
ests require that she bring an action in this court 
for damages for personal injuries received as a re- 
sult of being struck by a train which was owned 
and operated by the defendants. 

III. 

That Jesse J. Brown, who is the father of peti- 
tioner, is a responsible and competent party to be- 
come the guardian ad litem for said minor; that 
no previous application has been made for the ap- 
pointment of a guardian ad litem. 

Wherefore, your petitioner respectfully prays 
this Honorable Court for an order appointing Jesse 
J. Brown, guardian ad litem of Clara Brown, and 
authorizing and empowering him to bring and 
prosecute an action as such guardian ad litem, on 
behalf of [5] said minor, against the owner and op- 
erator of said train to recover damages for the 
said injuries. 

/s/ CLARA BROWN, 
Petitioner. 

CLAUDE A. WATSON and 
EDWARD P. HART, 
By EDWARD P. HART, 

Attorneys for Petitioner. 



vs. Clara Brown, Etc. 7 

ORDER APPOINTING GUARDIAN AD 
LITEM 

Mr. Jesse J. Brown is hereby appointed guardian 
ad litem of plaintiff, Clara Brown, herein for the 
purpose of instituting and prosecuting an action 
in this court in behalf of said minor to recover 
damages for personal injuries occasioned through 
negligence upon the cause of action set forth in the 
said petition for the appointment of a guardian 
ad litem. 

Dated: This 29th day of Jan. 1947. 

/s/ H. C. SHEPHERD, 
Court Commissioner of Los Angeles County. 

(Duly verified.) 

[Endorsed] : Filed Jan. 29, 1947. [6] 



[Title of Superior Court and Cause.] 

NOTICE HEARING ON PETITION 
FOR REMOVAL 

To the Plaintiff above named and to Claude A. 
Watson and Edward P. Hart, her attorneys. 

You and each of you will please take notice that 
The Atchison, Topeka and Santa Fe Railway Com- 
pany, a corporation, one of the defendants in the 
above entitled action, on the 13th day of February, 
1947 in Department 35 of the Superior Court of the 
State of California in and for the County of Los 
Angeles, in the City of Los Angeles, at 9:30 o'clock 



8 The A. T. & S. F. By. Co. 

a. m., or as soon thereafter as the cause may be 
heard will present to the Superior Court of the 
State of California, in and for the County of Los 
Angeles, in the City of Los Angeles, said County 
and State, its [7] petition for and bond on removal 
of the above entitled action in the above entitled 
Court to the District Court of the United States, 
Southern District of California, Central Division, 
pursuant to the statutes in such cases made and 
provided; and that a copy of said petition and a 
copy of said bond, together with a copy of the pro- 
posed order of removal are hereto attached. 
Dated this 10th day of February, 1947. 

LEO E. SIEVERT, 
ROBERT W. WALKER, 
By ROBERT W. WALKER. 

[Endorsed] : Filed Feb. 10, 1947. [8] 



[Title of Superior Court and Cause.] 

PETITION FOR REMOVAL 

Comes now The Atchison, Topeka and Santa Fe 
Railway Company, a corporation, and presents this 
its Petition for Removal of the above entitled cause 
to the District Court of the United States, for the 
Southern District of California, Central Division, 
and in that behalf respectfully shows: 

I. 

That The Atchison, Topeka and Santa Fe Rail- 
way Company, a corporation, is one of the defend- 
ants in the above entitled action; that at the time 



vs. Clara Brown, Etc. 9 

of the commencement of said action, and for a long 
time prior thereto, said defendant was and had been 
a corporation organized and existing [9] under and 
by virtue of the laws of the State of Kansas, with 
its principal place of business in the City of Topeka 
in said State. That it is not now and was not at the 
time of the commencement of this action and never 
has been a corporation organized or existing under 
or by virtue of the laws of the State of California. 
That it was at all times and now is a citizen or 
resident of the State of Kansas. That it is not now 
and was not at any of the times heretofore men- 
tioned a citizen or resident of the State of Cali- 
fornia, but was at all of said times a citizen and 
resident of the State of Kansas and a nonresident 
of the State of California. 

II. 

That the plaintiff in the above entitled action, 
was at the commencement of said action, ever since 
has been and now is a resident of the State of Cali- 
fornia, and that said plaintiff was not at any of the 
said times and is not now a resident of the State of 
Kansas, or of any other states other than the State 
of California, but at all of said times, plaintiff was 
and now is a nonresident of the State of Kansas, 
and of every other state except the State of Cali- 
fornia. 

III. 

That the above action is a suit of a civil nature 
brought by the plaintiff to recover a judgment 
against your petitioner in the sum of One Hundred 



10 The A. T. & S. F. Ry. Co. 

Thousand ($100,000.00) Dollars, and for costs of 
suit for damages alleged to have been sustained by 
plaintiff by reason of the alleged negligent handling 
of a railroad switch engine, which collided with 
plaintiff in the City of Los Angeles, California, on 
June 13, 1946. [10] 

IV. 

That the amount in controversy in the above en- 
titled action exceeds, exclusive of interest and costs, 
the sum and value of Three Thousand Dollars 
($3,000.00). 

V. 

That this is a suit in which there is a controversy 
between citizens or residents of different states, 
which can be fully determined as between them, and 
that your petitioner is actually interested in such 
controversy. 

VI. 

That said action is one of which the District Courts 
of the United States are given original jurisdiction. 

VII. 

That the time within which your petitioner is 
required by the laws of this State and the rules of 
this Court to answer or plead to the Complaint in 
the above entitled action has not yet expired. 

VIII. 

That the controversy in said suit is between citi- 
zens of different states in that your petitioner at 



vs. Clara Brown, Etc. 11 

the time of the commencement of this action was 
and still is a foreign corporation, created and exist- 
ing under the laws of the State of Kansas, and was 
then and still is a resident of a state other than the 
State of California, and plaintiff was and still is 
a resident of the State of California. 

IX. 

That your petitioner offers and presents herewith 
a good and sufficient bond and surety as provided 
by the statutes in such cases, conditioned that it will 
within thirty (30) days from the filing of this peti- 
tion enter a [11] certified copy of the record in the 
above entitled cause in the United States District 
Court for the Southern District of California, Cen- 
tral Division, and will pay all costs that are awarded 
by the said District Court if it is held that the 
said action was wrongfully or improperly removed 
thereto. 

Wherefore, petitioner prays that this Court ac- 
cept this petition and said bond and surety and that 
said action be removed to said District Court of 
the United States for the Southern District of Cali- 
fornia, Central Division, pursuant to the statutes 
in such cases made and provided, and that this 
Court proceed no further in this action except to 
make the order of removal as prayed for, accept 
and approve the bond presented herewith, and di- 
rect the Clerk of this Court to prepare a certified 
copy of the record in the above entitled action 
for entry in the said District Court of the United 



12 The A. T. & S. F. Ry. Co. 

States for the Southern District of California, Cen- 
tral Division. 

THE ATCHISON, TOPEKA AND SANTA FE 
RAILWAY COMPANY, a corporation, 

LEO E. SIEVERT, 
ROBERT W. WALKER, 

By ROBERT W. WALKER, 
Its Attorneys. 

(Duly verified.) 

(Affidavit of Service by Mail attached.) 

[Endorsed] Filed Feb. 10, 1947. [12] 



[Title of Superior Court and Cause.] 

BOND ON REMOVAL 

Know all men by these presents : That Indemnity 
Insurance Company of North America, a corpo- 
ration, as surety, is held and firmly bound unto 
Clara Brown, a minor, by Jesse J. Brown, her 
guardian ad litem, plaintiff in the above entitled 
action, her legal representatives, successors and as- 
signs, in the sum of One Thousand Dollars 
($1,000.00), lawful money of the United States of 
America, for the payment of which well and truly 
to be made it binds itself, its successors and assigns, 
as the case may be, jointly and severally, firmly by 
these presents. 



vs. Clara Brown, Etc. 13 

The condition of the above obligation is such 
that: 

Whereas, The Atchison, Topeka and Santa Fe 
Railway Company, a corporation, one of the above 
named defendants, has applied by petition to the 
Superior Court of the State [15] of California, in 
and for the County of Los Angeles, for removal 
of a certain cause therein pending, wherein 
CLARA BROWN, a minor, by Jesse J. Brown, her 
guardian ad litem, is plaintiff and The Atchison, 
Topeka and Santa Fe Railway Company, a corpo- 
ration, is one of the defendants, to the District 
Court of the United States, for the Southern Dis- 
trict of California, Central Division, for further 
proceedings on the grounds in said petition set 
forth, and that all further proceedings in said action 
in said Superior Court be stayed. 

Now, therefore, if The Atchison, Topeka and 
Santa Fe Railway Company, a corporation, one of 
the defendants above named, shall within thirty 
(30) days from and after the date of the filing of 
said petition enter in said District Court of the 
United States of America, a duly certified copy of 
the record in the above entitled action, and shall 
pay or cause to be paid all costs that may be 
awarded therein by the District Court of the United 
States, if such Court shall hold that such action 
was wrongfully or improperly removed thereto, then 
this obligation shall be void, otherwise to remain 
in full force and effect. 



14 The A. T. & S. F. Ry. Co. 

Dated: Los Angeles, California, this 10th day of 
February, 1947. 

INDEMNITY INSURANCE COMPANY OF 
NORTH AMERICA 

(Seal) By /s/ C. F. BATCHELDER, 

Its Attorney in Fact. 

The foregoing Bond on Removal is hereby ap- 
proved as to form and sufficiency of surety, this 
10th day of February, 1947. 

/s/ H. C. SHEPARD, 

Court Commissioner of Los Angeles County. 

State of California, 
County of Los Angeles — ss, 

On this 10th day of February in the year one 
thousand nine hundred and forty seven before me 
F. D. Lanctot, a Notary Public in and for the 
County of Los Angeles, personally appeared C. F. 
Batchelder known to me to be the person whose 
name is subscribed to the within instrument at the 
Attorney-in-Fact of the Indemnity Insurance Com- 
pany of North America, and acknowledged to me 
that he subscribed the name of the Indemnity In- 
surance Company of North America thereto as prin- 
cipal, and his own name, as Attorney-in-Fact. 

(Seal) F. D. LANCTOT, 

Notary Public in and for the county of Los An- 
geles, State of California. 
My Commission Expires August 24, 1947. 

[Endorsed] : Filed Feb. 10, 1947. [16] 



vs. Clara Brown, Etc. 15 

In the Superior Court of the State of California 
in and for the County of Los Angeles 

Honorable Allen W. Ashburn, Judge presiding; 
Department No. 35. 

Dated February 13, 1947. Entered February 21, 
1947. 

[Title of Cause.] 

COPY OF MINUTE ORDER 

Petition and Bond of defendant The Atchison, 
Topeka and Santa Fe Railway Company, a corpo- 
ration, for removal to District Court of United 
States, Southern District of California, Central 
Division, comes on for hearing. Leo E. Sievert and 
Robert W. Walker by J. H. Cummins appearing 
as counsel for the moving defendant. Said matter 
is transferred to Department 34 for hearing. [17] 



In the Superior Court of the State of California 
in and for the County of Los Angeles 

Honorable Frank G. Swain, Judge presiding ; De- 
partment No. 34. 

Dated February 13, 1947. Entered February 21, 
1947. 

[Title of Cause.] 

COPY OF MINUTE ORDER 

Motion of defendant Atchison, Topeka & Santa 
Fe Railway Co. for removal to the District Court 
of the United States, Southern District of Califor- 



16 The A. T. & S. F. By, Co. 

nia, Central Division, transferred from Department 
35, comes on for hearing. Joseph H. Cummins ap- 
pearing as attorney for the defendant. Said mo- 
tion is granted. [18] 



[Title of Superior Court and Cause.] 

ORDER OF REMOVAL 

The Atchison, Topeka and Santa Fe Railway 
Company, a corporation, one of the defendants in 
the above named action, having within the time pro- 
vided by law filed its petition in due form for the 
removal of said action to the District Court of the 
United States, for the Southern District of Cali- 
fornia, Central Division, and having at the same 
time offered a good and sufficient bond, as required 
by law, and said bond having been approved, and 
it appearing to the Court that said defendant is 
entitled to have said cause removed to said District 
Court of the United States for the Southern Dis- 
trict of California, Central Division: 

Now therefore, it is hereby ordered that said 
action be removed into the District Court of the 
United [19] States for the Southern District of 
California, Central Division, and that all further 
proceedings in this Court in said action be and they 
are hereby stayed, and the Clerk of this Court is 
hereby directed to make a certified copy of the 



vs. Clara Brown, Etc. 17 

record in said action for entry in said United States 
District Court. 

Dated this 13th day of February, 1947. 

/s/ FRANK G. SWAIN, 

Judge. 

[Endorsed] : Filed Feb. 13, 1947. [20] 



[Title of Superior Court and Cause.] 

AFFIDAVIT OF SERVICE OF ORDER 
OF REMOVAL 

State of California, 
County of Los Angeles — ss. 

Evelyn Hansen, being first duly sworn, says : That 
affiant is a citizen of the United States and a resi- 
dent of the County of Los Angeles; that affiant is 
over the age of eighteen years and is not a party 
to the within and above entitled action; that affiant's 
business address is 448 Santa Fe Building, 121 East 
Sixth Street, Los Angeles 14, California, that on 
the 14th day of February, 1947, affiant served the 
within Order of Removal dated February 10th, 
1947, on the attorneys for the plaintiff in said ac- 
tion, by placing a true copy thereof in an envelope 
addressed to the attorneys of record for said de- 
fendants at the office address of said attorneys as 
follows: Messrs. Claude A. Watson and Edward 
P. Hart, Attorneys at Law, 5937 Monterey Road, 
Los Angeles 42, California and by then sealing said 
envelope and depositing the same, with postage 



18 The A. T. & S. F. By. Co. 

thereon fully prepaid, in the United States Post 
Office at Los Angeles, California, where is located 
the office of the attorneys for the person by and for 
whom said service was made. 

That there is delivery service by United States 
mail at the place so addressed, or there is a regular 
communication by [21] mail between the place of 
mailing and the place so addressed. 

EVELYN HANSEN. 

Subscribed and sworn to before me this 14th day 
of February, 1947. 

(Seal) ETHEL M. MAGNUSON, 

Notary Public in and for said County and State. 
[Endorsed]: Filed Feb. 14, 1947. [22] 



[Title of Superior Court and Cause.] 

CLERK'S CERTIFICATE 

State of California, 
County of Los Angeles — ss. 

I, J. F. Moroney, County Clerk and Clerk of the 
Superior Court in and for the County and State 
aforesaid, do hereby certify the foregoing copies of 
documents consisting of the Complaint, Petition 
and Order for Appointment of Guardian Ad Litem, 
Notice of Hearing Petition for Removal, Petition 
for Removal, Bond on Removal, Minute Order of 
February 13, 1947, transferring hearing on petition 
for removal to Dept. 34, Minute Order of February 
13, 1947, granting petition for removal, Order for 



vs. Clara Brown, Etc, 19 

Removal to the United States District Court South- 
ern District of California (Central Division), and 
Affidavit of Service of Order for Removal, in the 
action of Clara Brown, a minor, by Jesse J. Brown, 
her guardian ad litem vs. Atchison, Topeka & Santa 
Fe Railway Co., a corporation et al to be a full, 
true and correct copy of all of the original docu- 
ments on file and/or of record in this office in the 
above entitled action to date, and that I have care- 
fully compared the same with the original. 

In witness whereof, I have hereunto set my hand 
and affixed the seal of the Superior Court this 28th 
day of February, 1947. 

(Seal) J. F. MORONEY, 

County Clerk and Clerk of the Superior Court of 

the State of California, in and for the County 

of Los Angeles. 

By /s/ M. E. SETTLE, 
Deputy. 

[Endorsed] : Filed March 12, 1947. [23] 



20 The A. T. & S. F. By. Co. 

In the District Court of the United States Southern 
District of California, Central Division 

No. 6597-W 

CLARA BROWN, a minor, by Jesse J. Brown, her 
guardian ad litem, 

Plaintiff, 

vs. 

ATCHISON, TOPEKA & SANTA FE RAIL- 
WAY CO., a corporation, T. F. ROBINSON, 
John Doe, Jane Doe, and Doe Company, a cor- 
poration, 

Defendants. 

ANSWER 

Comes now, The Atchison, Topeka and Santa Fe 
Railway Company, a corporation, erroneously sued 
herein as Atchison Topeka & Santa Fe Railway 
Co., a corporation, and answering for itself alone, 
and for answer to plaintiff's Complaint, admits, 
denies and alleges as follows: 

I. 

Answering Paragraph III of plaintiff's Com- 
plaint, this answering defendant alleges that its true 
name is The Atchison, Topeka and Santa Fe Rail- 
way Company, and that it is a corporation orga- 
nized and existing under and by virtue of the laws 
of the State of Kansas, and that it is authorized 
to do and is carrying on the business of a common 
carrier by rail in the State of California. [25] 



vs. Clara Brown, Etc. 21 

II. 

Denies each and every, all and singular, the alle- 
gations contained in Paragraph V of said Com- 
plaint. 

III. 

Denies each and every, all and singular, the alle- 
gations contained in paragraph VI of said Com- 
plaint. Further answering said Paragraph VI, 
defendant denies that Clara Brown was damaged 
in the sum of One Hundred Thousand Dollars 
($100,000.00), or in any sum, or at all. 

As a further, separate and affirmative defense to 
plaintiff's complaint, answering defendant al- 
leges : 

I. 
That at the time and place set forth in the Com- 
plaint on file herein, Clara Brown failed to exercise 
ordinary care for her own safety under conditions 
then existing, which lack of care on her part prox- 
imately caused or contributed to any injuries sus- 
tained by her. That any injury or damage sus- 
tained by Clara Brown, was proximately caused 
or contributed to by her own negligence. 

As a second, separate and affirmative defense to 
Plaintiff's complaint, answering defendant al- 
leges: 

I. 
That the sole proximate cause of any injury suf- 
fered by plaintiff, Clara Brown, as alleged in said 
Complaint was the negligence of said Clara Brown 
at said time and place in failing to exercise ordi- 



22 The A. T. & S. F. By. Co. 

nary care under the circumstances then existing 
for her own safety. [26] 

Wherefore, this answering defendant prays that 
plaintiff take nothing by her Complaint on file 
herein and that this answering defendant be 
awarded its costs of suit herein and that the Court 
grant such other and further relief as to the Court 
may seem meet and proper. 

LEO E. SIEVERT, 
ROBERT W. WALKER, 
By /s/ ROBERT W. WALKER, 
Attorneys for Defendant, The Atchison, Topeka 
and Santa Fe Railway Company, a corporation. 

(Affidavit of Service by Mail attached.) 
[Endorsed] : Filed March 17, 1947. [27] 



[Title of District Court and Cause.] 

AMENDED COMPLAINT FOR DAMAGES 

(Personal Injuries) 

Plaintiff complains of defendants, and for cause 
of action alleges as follows: 

I. 

That the above named Clara Brown is a minor 
of the age of 15 years, and brings this action by 
and through Jesse J. Brown, her guardian ad litem, 
heretofore appointed guardian ad litem by an order 
of the above entitled court. 



vs. Clara Brown, Etc. 23 

II. 

That the true names of the defendants John Doe, 
Jane Doe, and Doe Company, a corporation, are 
unknown to the plaintiff at this time, but when 
the same are ascertained, plaintiff will ask leave of 
the court to substitute such true names in place 
thereof. 

III. 

That at all times herein mentioned, the Atchi- 
son, Topeka [28] and Santa Fe Railway Company, 
is a corporation, duly organized and existing under 
the laws of the State of Kansas, and said corpora- 
tion owns and operates a general railroad transpor- 
tation business in the County of Los Angeles, more 
particularly, along a certain track and right of 
way running in a general easterly and westerly di- 
rection across Avalon Boulevard approximately ten 
feet north of the northerly curb line of Slauson 
Avenue within the City of Los Angeles, County of 
Los Angeles, State of California; 

IV. 

That at all times here mentioned Avalon Boule- 
vard was and is a public thoroughfare in the City 
of Los Angeles, County of Los Angeles and State 
of California, running in a general northerly and 
southerly direction, intersecting Slauson Avenue, 
also a public thoroughfare in said City, County 
and State. 

V. 

That at all times herein mentioned there was in 
full force and effect in the City of Los Angeles, 
County of Los Angeles, State of California a muni- 



24 The A.T.& S. F. By. Co. 

cipal ordinance, the same being L. A. Municipal 
Code Ordinance No. 77000, as amended by ordi- 
nance as Section 72.10 thereof. 

"(a) The operator of any steam, diesel or gaso-. 
line propelled railroad train, car or other rolling 
equipment shall not drive, or cause or permit to be 
driven such train, car or equipment into or upon 
a highway at a speed greater than is reasonable 
or prudent having due regard for the traffic on, 
and the surface and width of the highway, and in 
no event at a speed which endangers the safety of 
persons or property; provided however, that wher- 
ever such train, car or equipment is operated lon- 
gitudinally over the same portion of a highway that 
is also used by motor vehicles, the maximum lawful 
speed for such operation shall be ten (10) miles 
per hour. [29] 

"(b) The speed of any such train, car or equip- 
ment not in excess of the limits herein specified is 
lawful unless clearly proved to be in violation of 
the basic rule hereinabove in this section declared. 

"(c) The speed of any such train, car or equip- 
ment upon a highway in excess of any of the limits 
specified in this section is prima facie unlawful 
unless the defendant establishes by competent evi- 
dence that any speed in excess of said limits did 
not constitute a violation of the basic rule herein- 
above in this section reclared, at the time, place and 
under the conditions then existing. 

"(d) The prima facie limits referred to above 
are as follows: 

"1. Fifteen (15) miles per hour: 



vs. Clara Broivn, Etc. 25 

"(a) When entering any highway crossing 
within the district included within the following de- 
scribed boundaries : Beginning at the intersection of 
Soto Street and Huntington Drive, southerly along 
Soto Street to the southerly city limits; thence 
southerly and westerly along the city boundary to 
Florence Avenue, thence westerly along Florence 
Avenue to the w T est city boundary, thence northerly 
along the west city boundary and west Boulevard 
to Slauson Avenue, thence easterly on Slauson Ave- 
nue to Western Avenue, thence northerly from West- 
ern Avenue to Vernon Avenue, thence easterly along 
Vernon Avenue to Broadway, thence northerly 
along Broadway and North Broadway to Mission 
Road, thence northerly along Mission Road and 
Huntington Drive to the point of beginning." 

That said ordinance was duly adopted, approved 
and enacted by the City Counsel of the City of Los 
Angeles and signed by the mayor thereof and pub- 
lished in the manner and in accordance with law. 

VI. 

That at all times herein mentioned the defend- 
ant's switch [30] engine No. 2319, traveling at a 
speed in excess of Fifteen (15) miles per hour in 
violation of said city ordinance. The excessive speed 
of said engine contributed directly and proximately 
to the cause of said collision and/or damage here- 
inafter described. 

VII. 

That on June 13th, 1946, at about the hour of 
5:55 p. m. on said day, plaintiff Clara Brown 
alighted from a southbound Los Angeles Transit 



26 The A. T. & S. F. By. Co. 

Line streetcar, which had stopped immediately north 
of the said railroad tracks owned and operated by 
the defendant Atchison, Topeka & Santa Fe Rail- 
way Co., and that said plaintiff was walking toward 
the public sidewalk on the west side of said Avalon 
Boulevard, at which time and place the said de- 
fendant, through its agents, servants and employees, 
acting within the scope of their employment, so neg- 
ligently, carelessly and recklessly operated a certain 
switch engine No. 2319, westbound on said railroad 
tracks, as to cause the same to collide with the plain- 
tiff and drag her a distance of one hundred nine 
feet (109'). 

VIII. 

That by reason of the negligent acts of said de- 
fendant in the operation of said train on said rail- 
road tracks at said time and place aforementioned, 
plaintiff Clara Brown sustained bodily injuries, 
which required the amputation of her right leg, 
and that plaintiff was also injured about her face, 
head and body, all of which injuries are permanent 
in character and progressive in nature. That by 
reason of said bodily injuries, plaintiff has been 
damaged in the sum of One Hundred Thousand 
Dollars ($100,000.00). 

Wherefore, plaintiff prays judgment against the 
defendants as follows: 

1. For general compensatory damages in the sum 
of One Hundred Thousand Dollars ($100,000.00). 

2. For costs of suit herein incurred. [31] 



vs. Clara Brown, Etc. 27 

3. For such other and further relief as the court 
may deem just in the premises. 

CLAUDE A. WATSON and 
EDWARD P. HART, 
By /s/ EDWARD P. HART, 

Attorneys for Plaintiff. 

[Endorsed] : Filed Nov. 21, 1947. [32] 



[Title of District Court and Cause.] 

ANSWER TO AMENDED COMPLAINT 

Comes Now, defendant The Atchison, Topeka and 
Santa Fe Railway Company, a corporation, erro- 
neously sued herein as Atchison, Topeka & Santa 
Fe Railway Co., a corporation, and answering for 
itself alone, and for answer to plaintiff's Amended 
Complaint, Admits, Denies and Alleges as follows: 

I. 

Answering Paragraph III of plaintiff's Amended 
Complaint, this answering defendant Alleges that 
its true name is The Atchison, Topeka and Santa 
Fe Railway Company, and that it is a corporation 
organized and existing under and by virtue of the 
laws of the State of Kansas, and that it is author- 
ized to do and is carrying on the business of a com- 
mon carrier by rail in the State of California. [33] 

II. 

Answering Paragraph V, this answering defend- 
ant Alleges that it has no information or belief 
sufficient to enable it to answer the allegations con- 
tained in said paragraph and basing its answer on 



28 The A. T. & S. F. By. Co. 

said grounds, Denies generally and specifically each 
and every allegation therein contained. 

III. 

Denies each and every, all and singular, the al- 
legations contained in Paragraphs VI and VII of 
said Amended Complaint. 

IV. 

Denies each and every, all and singular, the alle- 
gations contained in Paragraph VIII of said 
Amended Complaint. Further answering said Para- 
graph VIII, defendant denies that Clara Brown 
was damaged in the sum of One Hundred Thousand 
Dollars ($100,000.00), or in any sum, or at all. 

As a First, Separate and Affirmative Defense to 
Said Complaint, This Answering Defendant Al- 
leges as Follows: 

I. 
That at the time and place set forth in the Com- 
plaint on file herein, said injuries, if any, sustained 
by Clara Brown were the result of an inevitable 
and unavoidable accident. 

As a Second, Separate and Affirmative Defense to 
Said Amended Complaint, This Answering De- 
fendant Alleges as follows: 

I. 

That at the time and place set forth in the 
Amended Complaint on file herein, Clara Brown 
failed to exercise ordinary care for her own safety 
under conditions then existing, which lack of care 
on her part proximately caused or contributed to 



vs. Clara Brown, Etc. 29 

any injuries sustained by her. That any injury or 
damage [34] sustained by Clara Brown, was proxi- 
mately caused or contributed to by her own neg- 
ligence. 

As a Third, Separate and Affirmative Defense to 
Plaintiff's Amended Complaint, This Answering 
Defendant Alleges as Follows: 

I. 

That the sole proximate cause of any injury suf- 
fered by plaintiff, Clara Brown, as alleged in said 
Amended Complaint was the negligence of said 
Clara Brown at said time and place in failing to 
exercise ordinary care under the circumstances then 
existing for her own safety. 

Wherefore, this answering defendant prays that 
plaintiff take nothing by her Amended Complaint 
on file herein and that this answering defendant be 
awarded its costs of suit herein and that the Court 
grant such other and further relief as to the Court 
may seem meet and proper. 

LEO E. SIEVERT, 
ROBERT W. WALKER, 
By /s/ ROBERT W. WALKER, 

Attorneys for Defendant, The Atchison, Topeka 
and Santa Fe Railway Company, a corporation. 

(Affidavit of Service by Mail attached.) 

[Endorsed] : Filed Dec. 5, 1947. [35] 



30 The A. T. & 8. F. By. Co. 

[Title of District Court and Cause.] 

ORDER REMANDING CAUSE TO STATE 

COURT 

On this 14th day of December, 1948, this cause 
came on regularly before the court for trial ; Claude 
A. Watson, Edward P. Hart, and Samuel P. Young, 
Esqs., by Samuel P. Young, Esq., appearing as 
counsel for the plaintiff; and Robert W. Walker, 
J. H. Cummins and J. B. Kramer, Esqs., by J. H. 
Cummins, Esq., appearing as counsel for the de- 
fendant The Atchison, Topeka and Santa Fe Rail- 
way Company; and the court on its own motion 
having ordered this cause remanded to the State 
Court for the reason that this cause has been im- 
properly removed to this court, and on the ground 
that this court does not have jurisdiction herein. 

It Is, Therefore, Ordered that this cause be, 
and it is, remanded to the Superior Court of the 
State of California, in and for the County of Los 
Angeles. 

Dated: Los Angeles, California, December 14, 
1948. 

/s/ BEN HARRISON, 

U. S. District Judge. 

Judgment entered Dec. 14, 1948. Docketed Dec. 
14, 1948. Book 54, Page 476. Edmund L. Smith, 
Clerk. By C. A. Simmons, Deputy. 

[Endorsed] : Filed Dec. 14, 1948. [37] 



vs. Clara Brown, Etc. 31 

[Title of District Court and Cause.] 

NOTICE OF APPEAL 

To the Clerk of the Above-Entitled Court : 

Notice Is Hereby given that the defendant, The 
Atchison, Topeka and Santa Fe Railway Company, 
one of the defendants above named, hereby appeals 
to the United States Court of Appeals for the Ninth 
Circuit, from the Order Remanding Cause to the 
Superior Court of the State of California, and en- 
tered in this action on the 14th day of December, 
1948. 

Dated this 27th day of December, 1948. 

ROBERT W. WALKER, 
J. H. CUMMINS, 
J. B. KRAMER, 

By /s/ J. H. CUMMINS, 

Attorneys for the Defendant, The Atchison, Topeka 
and Santa Fe Railway Company. 

[Endorsed] : Filed Dec. 27, 1948. [38] 



[Title of District Court and Cause.] 

NOTICE OF ATTORNEYS TO BE SERVED 

To the Clerk of the Above Court: 

You will please take notice that the attorneys 
to be served are as follows: Messrs. Claude A. 
Watson, and Edward P. Hart, 5937 Monterey Road, 
Los Angeles 42, Calif. Mr. Samuel P. Young, At- 



32 The A. T. & S. F. Ry. Co. 

torney at Law, 715 Black Building, 357 S. Hill 
Street, Los Angeles, Calif. 

Dated this 27th day of December, 1948. 

ROBERT W. WALKER, 
J. H. CUMMINS, 
J. B. KRAMER, 

By /s/ J. H. CUMMINS, 

Attorneys for the Defendant, The Atchison, To- 
peka and Santa Fe Railway Company. 

[Endorsed] : Piled Dec. 27, 1948. [39] 



[Title of District Court and Cause.] 

STATEMENT OF POINTS ON APPEAL 

The following are the points upon which appel- 
lant relies for its appeal from the Order of Re- 
mand, entered on the 14th day of December, 1948. 

(1) An Order of Remand by a Federal Court is 
an appealable order. 

(2) Whether a cause of action is alleged by the 
pleadings in a civil action pending before a State 
Court is a matter to be determined in accordance 
with State law. 

(3) The State Court has the power to deter- 
mine whether a cause of action has been stated 
against a resident or citizen of the State when a 
petition for removal is filed in said Court for the 
removal of a civil action to the Federal District 
Court. 



vs. Clara Brown, Etc. 33 

(4) A State Court having determined that a 
cause of action is not stated against a resident de- 
fendant and thereafter [40] ordering the case re- 
moved to the Federal Court, the question of 
whether a cause of action is stated in the pleading 
is fully determined and is not subject to collateral 
attack by a motion to remand in the Federal Dis- 
trict Court. 

(5) The action by the Federal District Court 
in remanding the case to the State Court for the 
reason that a cause of action was believed by said 
Federal District Court to have been stated against 
the resident defendant is wholly invalid and with- 
out effect where the State Court in the same case 
and prior to removal had determined that a cause 
of action was not stated. 

(6) The Federal District Court was in error 
in remanding the case to the State Court for lack 
of jurisdiction. 

Dated this 12th day of January, 1949. 

ROBERT W. WALKER, 

J. H. CUMMINS, 
J. B. KRAMER, 

By /s/ J. B. KRAMER, 
Attorneys for the Defendant, The Atchison, To- 
peka and Santa Fe Railway Company. 

[Endorsed] : Filed Jan. 13, 1949. [41] 



34 The A.T.& S.F. By. Co, 

[Title of District Court and Cause.] 

DESIGNATION OF CONTENTS OF RECORD 
ON APPEAL 

To the Clerk of the Above-Entitled Court: 

You are hereby requested to make a transcript 
of the record to be filed in the United States 
Court of Appeal for the Ninth Circuit, pursuant 
to appeal taken. You will include in said tran- 
script, the following: 

(1) All pleadings, processes, orders and docu- 
ments filed in the above-entitled Court, comprising 
the record on removal from the Superior Court of 
the State of California, in and for the County of 
Los Angeles. 

(2) All pleadings, processes and orders filed in 
the above-entitled case or made a part of the rec- 
ord thereof. 

(3) A transcript of proceedings before Hon. 
Ben Harrison, on the 14th day of December, 1948. 

(4) The Order of Remand made by the Hon. 
Ben Harrison. [42] 

(5) Notice of Appeal with date of filing. 

(6) Statement of Appellant of Points on which 
it intends to rely. 

(7) The designations of the parties as to the 
matter to be included in the record. 

The transcript of record herein requested is to 
be prepared as required by law and the rules of 



vs. Clara Brown, Etc. 35 

the Civil Procedure of the Federal Court, with 
particular reference to Rules 73-G and 75-K of the 
said Federal Rules. 

Dated this 12th day of January, 1949. 

ROBERT W. WALKER, 
J. H. CUMMINS, 
J. B. KRAMER, 

By /s/ J. B. KRAMER, 

Attorneys for the Defendant, The Atchison, To- 
peka and Santa Fe Railway Company. 

(Affidavit of Service by Mail attached.) 

[Endorsed] : Filed Jan. 13, 1949. [43] 



[Title of District Court and Cause.] 

CERTIFICATE OF CLERK 

I, Edmund L. Smith, Clerk of the United States 
District Court for the Southern District of Cali- 
fornia, do hereby certify that the foregoing pages 
numbered from 1 to 44, inclusive, contain the orig- 
inal papers on removal as certified by the clerk 
of the Superior Court for the State of California, 
County of Los Angeles; Answer; Amended Com- 
plaint for Damages; Answer to Amended Com- 
plaint; Order Remanding Cause to State Court; 
Notice of Appeal ; Notice of Attorneys to be Served ; 
Statement of Points on Appeal and Designation 
of Contents of Record on Appeal which, together 
with reporter's transcript of proceedings on De- 
cember 14, 1948, transmitted herewith, constitute 



36 The A. T. & S. F. By. Co. 

the record on appeal to the United States Court 
of Appeals for the Ninth Circuit. 

I further certify that my fees for preparing, 
comparing, correcting and certifying the forego- 
ing record amount to $1.60 which sum has been 
paid to me by appellant. 

Witness my hand and the seal of said District 
Court this 28th day of January, A.D. 1949. 

[Seal] EDMUND L. SMITH, 

Clerk. 



[Title of District Court and Cause.] 
Hon. Ben Harrison, Judge presiding. 

REPORTER'S TRANSCRIPT OF 
PROCEEDINGS 

Los Angeles, California 

Tuesday, December 14, 1948 

Appearances: For the Plaintiff: Claude A. Wat- 
son, Esquire, Edward P. Hart, Esquire, and Sam- 
uel P. Young, Esquire. For the Defendant Atchi- 
son, Topeka & Santa Fe: Robert W. Walker, Es- 
quire, J. H. Cummins, Esquire, and J. B. Kra- 
mer, Esquire. 

The Court: Case on trial. 

The Clerk: Clara Brown, a minor, versus the 
Atchison, Topeka and Santa Fe Railway Com- 
pany, No. 6597-BH. 

Mr. Cummins: Ready for the respondent. 

Mr. Young : Ready for the plaintiff. 

The Court: Gentlemen, I have decided that 
the court has no jurisdiction in this case. 

Not only has the Santa Fe been subpoenaed but 



vs. Clara Brown, Etc. 3? 

an individual who, from other papers, is shown 
to be an engineer employed by the Santa Fe Rail- 
way. 

I feel that this case has been improperly re- 
moved to this court. I am sorry that was not dis- 
covered earlier. Because of that this case will have 
to be tried in the Superior Court instead of the 
Federal Court. This court has no jurisdiction. 

Any judgment that might be rendered in this 
court would be void and would be set aside and 
there wouldn't be any protection for any of the 
parties concerned. 

The court should have discovered this situation 
before the jury was summoned. Counsel, some- 
where along the line, should have discovered it 
also. I suppose responsibility for this will have 
to be divided between counsel. 

The jury will be excused until notified to return 
and the case will be ordered remanded to the Su- 
perior Court for trial. 

Mr. Cummins: If your Honor please, will you 
state what the grounds of the remand is? 

The Court: It is on the ground the case should 
never have been removed. At the time it was re- 
moved there was a citizen of California subpoenaed 
as a defendant. It does not appear affirmatively 
from the papers that the other defendant was not 
a citizen of California. 

That is a burden placed upon the moving party 
to show. You based your right to have it tried in 
this court upon the fact that the railroad com- 
pany is a citizen of Kansas. The affidavit does 
not show the engineer's residence and no point 



38 The A. T. & S. F. By. Co. 

was made of it. You used more or less the regu- 
lar form of petition for removal just the same as 
though you were the sole defendant named. There 
is named an individual in addition to the John 
Does and I am satisfied that any steps that I have 
taken or that this court has taken since it has 
been here were entirely void. 

I am sorry for the delay but it doesn't inter- 
fere with a proper adjudication of the rights of 
the parties. 

Mr. Cummins: I am at a loss to know what 
the law is with respect to the appealability of such 
an order, or the necessity of stating an exception 
to the order. In any event I would like to ex- 
cept to the order of the court. 

The Court: I am glad to allow you an excep- 
tion. I don't know what the new rule provides 
but under the old rule there is no review. 

Mr. Young : I had the idea that since the change 
there was a review permitted. 

The Court: There may be but when there is a 
question of jurisdiction in doubt it shall be re- 
solved against jurisdiction. Of course if it is in 
the state court and nobody else is served you can 
bring it back. 

Mr. Young: Your Honor, am I correct in in- 
terpreting your Honor's decision as not having 
any effect upon 

The Court: It doesn't have anything to do with 
the merits of the case at all. 

Mr. Young: And that we will be entitled to go 
to trial. 



vs. Clara Brown, Etc. 39 

The Court: The only thing it does is to un- 
fortunately create a delay. 

The Clerk: I suggest one side or the other 
prepare an order. 

Mr. Cummins: I will do that, your Honor. 

The Court : Very well. 

(Whereupon the above-entitled proceedings 
were concluded.) 

CERTIFICATE 

I hereby certify that I am a duly appointed, 
qualified and acting official court reporter of the 
United States District Court for the Southern 
District of California. 

I further certify that the foregoing is a true 
and correct transcript of the proceedings had in 
the above-entitled cause on the date or dates spe- 
cified therein, and that said transcript is a true 
and correct transcription of my stenographic notes. 

Dated at Los Angeles, California, this 14th day 
of January, A.D. 1949. 

/s/ J. D. AMBROSE, 

Official Reporter. 

[Endorsed]: Filed Jan. 19, 1949. 



40 The A. T. & S. F. Ry. Co. 

[Endorsed]: No. 12169. United States Court 
of Appeals for the Ninth Circuit. The Atchison, 
Topeka and Santa Fe Railway Company, Appel- 
lant, vs. Clara Brown, a Minor, by Jesse J. Brown, 
Her Guardian, ad litem, Appellee. Transcript of 
Record. Appeal from the United States District 
Court for the Southern District of California, 
Central Division. 

Filed January 31, 1949. 

/s/ PAUL P. O'BRIEN, 
Clerk of the United States Court of Appeals for 
the Ninth Circuit. 



vs. Clara Brown, Etc. 41 

In the United States Court of Appeals 
for the Ninth Circuit 

No. 12169 

THE ATCHISON, TOPEKA AND SANTA FE 
RAILWAY COMPANY, a Corporation, 

Appellant, 

vs. 

CLARA BROWN, etc., 

Appellee. 

DESIGNATION OF POINTS ON APPEAL 

To the Clerk of the United States Court of Ap- 
peals for the Ninth Circuit: 

Comes now Appellant, under the provisions of 
Subdivision 6, Rule 19, and adopts as its points 
on appeal the Statement of Points appearing in 
the transcript of record certified to this Court. 

Dated this 8th day of February, 1949. 

ROBERT W. WALKER, 
J. H. CUMMINS, 
J. B. KRAMER, 

By /s/ J. B. KRAMER, 

Attorneys for Appellant. 

(Affidavit of Service by Mail attached.) 

[Endorsed] : Filed February 11, 1949. Paul P. 
O'Brien, Clerk. 



TOPICAL INDEX 



PAGE 



Basis of jurisdiction 1 

Questions presented 2 

Specifications of error 2 

I. 

An order of remand by a federal court is an appealable order.... 3 

II. 

The Federal District Court was in error when it assumed au- 
thority to determine whether a cause of action had been 
stated in the complaint against a resident citizen of California, 
the state court from which the case had been removed hav- 
ing previously determined that a cause of action was not 
stated 9 

Conclusion 12 



TABLE OF AUTHORITIES CITED 

Cases page 

Armour & Co. v. Kloeb, 109 F. 2d 72 10 

Ayers v. Chicago, 101 U. S. 184, 25 L. Ed. 838 4 

Chicago and Alton R. R. Co. v. Wiswall (23 Wall. 507), 90 
U. S. 507, 23 L. Ed. 103 6 

Clancy v. Brown, 71 F. 2d 110 9 

Employers Re-Insurance Corp. v. Bryant, 299 U. S. 374, 81 
L. Ed. 289 5, 10 

Good v. Hartford Accident & Indemnity Co., 39 Fed. Supp. 
475 5, 10 

Hoadley v. City and County of San Francisco, 94 U. S. 4, 24 
L. Ed. 34 4 

Kloeb v. Armour & Co., 311 U. S. 199, 85 L. Ed. 124 11 

Little York Gold-Washing etc. Co. v. Keyes, 96 U. S. 199, 24 
L. Ed. 656 5 

Madisonville Traction Co. v. St. Bernard Min. Co., 196 U. S. 

239, 49 L. Ed. 462 9 

McAllister v. Chesapeake & O. R. Co., 243 U. S. 302, 61 L. Ed. 

735 4 

Nashville v. Cooper, 73 U. S. 247, 18 L. Ed. 851 5, 6 

Pennsylvania Co., Re, 137 U. S. 451, 34 L. Ed. 738 5 

Rogers v. Watson, et al., 46 F. 2d 753 5, 8 

Satterley, In re, 102 F. 2d 144 8 

Southern Pac. Co. v. Haight, 126 F. 2d 900 9 

Steinfur Patents Corporation v. Meyerson et al., 49 F. 2d 765.... 8 

Stone v. State of South Carolina, 17 U. S. 430, 29 L. Ed. 962.... 9 

Vietti, et al. v. Wayne, et al., 136 F. 2d 771 8 

Wecker v. National Enameling & S. Co., 204 U. S. 176, 51 L. 

Ed. 430 ,....4, 7 



PAGE 

Wilson v. Republic Iron & S. Co., 257 U. S. 92, 66 L. Ed. 

144 4, 7, 9, 10 

Zadig v. Aetna Ins. Co., 42 F. 2d 142 7, 8 

Statutes 

Judiciary Act of 1789 (Act of Sept. 24, 1789, Chap. 20, 1 Stat. 

73) .... 3 

Judiciary Act of 1875, Chap. 137, 18 Stat. 470, 472 4 

Judiciary Act of March 3, 1887, Chap. 373, 24 Stat. 552 4 

Public Law 773, Chap. 646, 80th Cong., 2d Sess 5 

United States Code, Title 28, Sec. 1291 1, 2 

United States Code, Title 28, Sees. 1441-1450 1, 3, 5 

United States Code Annotated, Title 28, Sec. 71 11 

United States Code Annotated, Title 28, Sec. 71, Note 21 5 

United States Code Annotated, Title 28, Sec. 72 11 

United States Code Annotated, Title 28, Sec. 72, Notes 325, 326.. 10 

United States Code Annotated, Title 28, Sec. 80 11 



No. 12169 
IN THE 



United States Court of Appeals 



FOR THE NINTH CIRCUIT 



The Atchison, Topeka and Santa Fe Railway Com- 
pany, 

Appellant, 
vs. 

Clara Brown, a Minor, by Jesse J. Brown, Her Guardian 
ad Litem, 

Appellee. 



APPELLANT'S OPENING BRIEF. 



Basis of Jurisdiction. 

Respondent, a citizen of the State of California, filed a 
complaint in the Superior Court of the State of California, 
in and for the County of Los Angeles. This complaint 
stated a cause against the appellant herein, a citizen and 
resident of the State of Kansas. A petition for removal 
on the grounds of diversity of citizenship was filed in the 
State Court, and the State Court granted the removal, 
there being no cause of action stated against a resident 
defendant. On the date set for trial, the Federal District 
Court, on its own motion, remanded the case to the Su- 
perior Court, on the grounds that the Federal Court was 
without jurisdiction. No evidence was taken in the 
Federal Court. 

The attention of the Court is invited to 28 U. S. C, 
Sections 1291, and 1441 to 1450, inclusive. 



— 2— 

Questions Presented. 

A. Is the order of the Federal District Court remand- 
ing a case to a State Court a final decision within the 
meaning of 28 U. S. C. 1291, which section provides for 
appeals from final decisions? 

B. Does the Federal District Court have the power to 
determine that a cause of action is stated under state law 
in a case where the State Court, in the removal proceed- 
ings, has prior thereto determined a cause of action was 
not stated? 

Specifications of Error. 

The Federal District Court was in error when it as- 
sumed the authority to determine whether a cause of 
action had been stated in the complaint against a resident 
citizen of California, the State Court from which the case 
had been removed having previously determined that a 
cause of action was not stated. 

(1) Whether a cause of action based upon the state 
statute is stated in the complaint is a matter of state law. 

(2) The State Court has the power to determine 
whether a cause of action has been stated against a resi- 
dent citizen upon being presented with a petition for re- 
moval, the State Court having determined that a cause of 
action is not stated against a resident defendant may there- 
upon order the case removed to the Federal Court. 

(3) The question of whether a cause of action has been 
stated by the complaint was fully determined and is not 
subject to collateral attack by motion of remand. 

(4) The action of the Federal District Court in re- 
manding the case to the State Court for the reason that a 
cause of action was believed by the Federal District Court 



— 3— 

to have been stated against a resident defendant is wholly 
invalid and without effect, where the State Court in the 
same case and prior to removal had determined that a 
cause of action was not stated. 

I. 

An Order of Remand by a Federal Court Is an 
Appealable Order. 

The proposition that an order of remand is an appealable 
order has reference to an order of the Federal District 
Court remanding a case to a State Court and does not 
contemplate or include an order of remand by an appellate 
court to an inferior court or a trial court within its own 
judicial system. 

It is the contention of the appellant that Public Law 
773, 80th Congress, 28 U. S. C. A. 1441 to 1450, termi- 
nates the previous exclusive authority of the Federal Dis- 
trict Judge to determine the removability of an action in 
a proceeding to remand. It is believed that a brief his- 
torical review of the statutes on removal may at this time 
prove helpful. 

The Judiciary Act of 1789 (Act of September 24, 1789, 
Chap. 20, 1 Stat. 73) provided for the removal of certain 
classes of cases from the State Court to the Federal Cir- 
cuit Court. The statute further provided as follows: 

"* * * it shall then be the duty of the State Court 
to accept the surety and proceed no further in the 
case. * * *" 

This statute contained no provision for a remand to the 
State Court. 

From the first Judiciary Act of 1789, until 1875, no 
material change in the removal statutes were enacted 



excepting to enlarge the class of cases removable. The 
Judiciary Act of 1875, Chapter 137, 18 Stat. 470, 472, was 
a departure from the former Judiciary Act in two respects. 
It provided for a remand by the Federal Court to the State 
Court and provided for an appeal or writ of error to the 
Supreme Court from the order of the Federal Court dis- 
missing or remanding the case. The provisions as to the 
duty of the State Court to proceed no further upon re- 
moval were retained. 

Hoadley v. City and County of San Francisco, 94 
U. S. 4, 24 L. Ed. 34; 

Ayers v. Chicago, 101 U. S. 184, 25 L. Ed. 838. 

A third major change was enacted in 1887, being the 
Judiciary Act of March 3, 1887, Chapter 373, 24 Stat. 
552. This statute expressly prohibited appeal or writ of 
error from order of the Federal Court remanding the case 
to the State Court. It will be noted here that there was 
no prohibition for an appeal or writ of error for refusing 
to remand a case and such appeal or writs of error have 
been effected. 

Wccker v. National Enameling & S. Co., 204 U. S. 
176, 51 L. Ed. 430, 434; 

Wilson v. Republic Iron & S. Co., 257 U. S. 92, 
66 L.Ed. 144, 148; 

McAllister v. Chesapeake & O. R. Co., 243 U. S. 
302, 61 L. Ed. 735, 738. 

In addition to the express prohibition against appeal or 
writ of error, a new provision was enacted as follows : 

"such remand shall be immediately carried into execu- 
tion." 



— 5— 

rhis statute was held to be a complete prohibition against 
ippellate review including action through mandamus. 

Re Pennsylvania Co., 137 U. S. 451, 34 L. Ed. 738; 

Employers Re-Insurance Corp. v. Bryant, 299 U. S. 
374, 81 L. Ed. 289. 

The fourth and final major change was enacted by 
Public Law 773, 80th Congress, Chapter 646, Second 
Session, codified in 28 U. S. C. A., Sections 1441 to 1450, 
)ecoming effective September 1, 1948. This statute pro- 
vides for a remand by the District Court and eliminates 
:he prior prohibition against appeal or writ of error on 
Bi order of remand. It also eliminates the provisions 
;hat the order of remand shall be immediately carried into 
execution. The provision requiring the State Court to 
>roceed no further has also been changed, now reading, 
'and the State Court shall proceed no further therein 
mless the cause is remanded." 

The jurisdiction of the Federal District Court of a case 
•emoved thereto is purely statutory and entirely dependent 
hereon. 

Rogers v. Watson, et al., 46 F. 2d 753 ; 

Nashville v. Cooper, 73 U. S. 247, 18 L. Ed. 851; 

Little York Gold-Washing etc. Co. v. Keyes, 96 
U. S. 199, 24 L. Ed. 656, and other cases cited 
Note 21 to28U. S. C. A. 71; 

Good v. Hartford Accident & Indemnity Co., 39 
Fed. Supp. 475, 481. 

In order for the Federal Court to acquire jurisdiction, 
he proceedings on their face must in fact or in law come 
vithin the provisions of the removal statute, and in addi- 
ion thereto the procedure followed must be in accordance 



with that prescribed by the statute. The power of a Fed- 
eral District Court to remand a case to the State Court is 
likewise purely statutory. In the absence of a statute 
granting authority, the Federal Court may not by an order 
of remand empower or require a State Court to act. The 
State Court being outside Federal judicial system the 
order of remand could not be considered as one inherent 
with the Court. This is clearly evident in a removal case 
since the only authority the Federal Court could exercise 
was that authorized by the removal statute. 

Nashville v. Cooper, 73 U. S. 247, 6 Wall. 851. 

Any further act or order of the Court would be without 
jurisdiction. Were the Federal Court to remand the cause 
without the authority of statute, such order of remand 
would be no more than an announcement that the Federal 
Court refused to take jurisdiction of the case and the State 
Court from whence the case was originally removed would 
no longer be obligated to withhold further proceedings. 

The case of Chicago and Alton R. R. Co. v. Wiswall 
(23 Wall. 507), 90 U. S. 507, 23 L. Ed. 103, is often 
cited as authority for holding that an order of remand is 
not a final order and not appealable. This decision was 
rendered at a time when there was no statutory authority 
to remand. Subsequent cases on the point decided when 
there was an express prohibition against appeal or writ 
of error within the statute which created the right of 
removal and therefore the question of finality of the order 
of remand was never in issue subsequent to 1875. 

Whether an order is final and thereby appealable is 
largely dependent upon the position of the parties litigant 
after the order is made. The fact that another course of 



— 7— 

procedure may be available to a party does not prevent the 
order from being a final one. 

Wecker v. National Enameling & S. Co., 204 U. S. 
176,51 L. Ed. 430, 434. 

The case of Wilson v. Republic Iron & S. Co., 257 U. S. 
92, 66 L. Ed. 144, was a case involving a dismissal of a 
cause removed to the Federal Court after the Federal 
Court refused to remand to the State Court. The case 
was dismissed for lack of prosecution. The question pre- 
sented on appeal was whether the order of the Court dis- 
missing the case was final and thereby appealable. The 
Court stated (p. 148) : 

"Of course, the review can be had only after a 
final judgment. McLish v. Roff ', 141 U. S. 661, 35 
L. ed. 893, 12 Sup. Ct. Rep. 118. But a judgment 
of dismissal, such as is shown here, is a final judg- 
ment. That it leaves the merits undetermined and 
may not be a bar to another action does not make it 
interlocutory. It effectually terminates the particular 
case, prevents the plaintiff from further prosecuting 
the same, and relieves the defendant from putting in 
a defense. This gives it the requisite finality for the 
purposes of a review." (Citing cases.) 

The problem as to whether an order is final has been 
considered at some length by the Second Circuit Court of 
Appeals, beginning with the case of Zadig v. Aetna Ins. 
Co., 42 F. 2d 142. This decision concerned a case which 
had been dismissed for lack of prosecution and the Judge, 
believing the Court to be without further jurisdiction to 
vacate the order, refused to vacate the order of dismissal. 
The Court states at page 143 : 

"We think that the order, despite its name, was a 
final judgment, not an 'order for judgment' * * *. 



— 8— 

Tt assumed finally to dispose of the cause ex proprio 
vigore, contemplated no further action, and was like 
those considered in Hamilton Coal Co. v. Watts, 232 
F. 832 (C. C. A. 2), and Colorado Eastern Ry. Co. v. 
Union Pac. R. Co., 94 F. 312 (C. C. A. 8). To be 
sure, in each of these there was a judgment, eo 
nomine, for costs, but it makes no difference what the 
court's determination be called, so that it actually 
disposes of the suit and leaves nothing further to be 
done. Nor does lack of entry affect the validity of 
the judgment for most purposes." 

The case of Steinfur Patents Corporation v. Meyer son, 
et al., 49 F. 2d 765, at page 766, decided by the same Cir- 
cuit, commented upon the Zadig case as follows : 

"The authority relied on by the defendants, Zadig 
v. Aetna Ins. Co., 42 F. (2d) 142 (C. C. A. 2), in- 
volved a dismissal for lack of prosecution. The 
court considered the order of dismissal as if a final 
decree. We held that the trial court's refusing to 
consider the motion on the merits was not an exercise 
of discretion, but rather passing upon the want of 
jurisdiction. We held the order final and appealable. 
Such orders are appealable." (Cases cited.) 

This case was cited and followed by Victti, et al., v. 
Wayne, et al, 136 F. 2d 771. 

A judgment of dismissal for lack of jurisdiction de- 
pendent upon diversity of citizenship was considered to be 
final and appealable in the case of Rogers v. Watson, 46 
F. 2d 753, at page 754. 

An order of remand has been held to be a decision on 
the merits. 

In re Satterley, 102 F. 2d 144 (1st case). 



II. 

The Federal District Court Was in Error When It 
Assumed the Authority to Determine Whether a 
Cause of Action Had Been Stated in the Com- 
plaint Against a Resident Citizen of California, 
the State Court From Which the Case Had Been 
Removed Having Previously Determined That a 
Cause of Action Was Not Stated. 

(1) Whether a cause of action based upon the state 
statute is stated in the complaint is a matter of state law. 

(2) The State Court has the power to determine 
whether a cause of action has been stated against a resi- 
dent citizen upon being presented with a petition for 
removal, the State Court having determined that a cause 
of action is not stated against a resident defendant may 
thereupon order the case removed to the Federal Court. 

Upon the filing of a petition in the State Court for the 
removal of a cause to the Federal Court, the State Court 
is obligated to determine whether as a matter of law a 
removable cause has been pleaded. 

Stone v. State of So. Carolina, 117 U. S. 430, 29 
L. Ed. 962; 

Clancy v. Brown, 71 F. 2d 110; 

So. Pac. Co. v. Haight, 126 F. 2d 900; 

Madisonville Traction Co. v. St. Bernard Min. Co., 
196 U. S. 239, 49 L. Ed. 462, 464, 465; 

Wilson v. Republic Iron & 5. Co., 257 U. S. 92, 66 
L. Ed. 144. 

If the State Court finds that the cause is removable, it 
is obligated to order same removed although its failure to 
enter an order will not deprive a Federal Court of juris- 



—10— 

diction in the case. If the State Court finds that the 
petition and pleadings in the case do not present a remov- 
able case, it is not obligated to grant the removal and is 
authorized to proceed to try the case. A judgment en- 
tered as a result of such trial is valid, should the Federal 
Court determine the case to be non-removable. 

Wilson v. Republic Iron & S. Co., 257 U. S. 92, 66 
L. Ed. 144; 

Employers Reinsurance Corp. v. Bryant, 299 U. S. 
374, 81 L. Ed. 289. 

The decision of the State Court as to whether or not a 
cause of action is stated under a claim filed under a state 
statute is to be determined by the State Court and the 
Federal Court is without authority to determine that a 
cause of action is stated contrary to the ruling of the 
State Court on the matter. 

Good v. Hartford Accident & Indemnity Co., supra. 

See also cases cited, Notes 325 and 326, to 28 U. S. 
C. A., Section 72. 

(3) The question of whether a cause of action has been 
stated by the complaint was fully determined and is not 
subject to collateral attack by motion of remand. 

(4) The action of the Federal District Court in re- 
manding the case to the State Court for the reason that a 
cause of action was believed by the Federal District Court 
to have been stated against a resident defendant is wholly 
invalid and without effect, where the State Court in the 
same case and prior to removal had determined that a 
cause of action was not stated. 

The issues in this appeal have been discussed in consid- 
erable detail by the case of Armour & Co. v. Kloeb, 109 



—11— 

F. 2d 72, which case was overruled by the Supreme Court 
in the case of Kloeb v. Armour & Co., 311 U. S. 199, 85 
L. Ed. 124. The decision of the Circuit Court was under 
the former Judiciary Act contained in 28 U. S. C. A., 
Sections 71, 72 and 80, which contained express prohibi- 
tion against appeal or writ of error, yet the Circuit Court 
was of the opinion that the question of separability of 
causes of action had been fully determined by the State 
Court of Ohio, from which Court the action had been 
removed, and therefore held that the Federal District 
Court was without authority to render a decision on the 
matter. The Supreme Court in overruling the Circuit 
Court points out that the District Court considered the 
petitions and affidavits. This fact clearly distinguishes 
the Armour case from the case at bar for the reason that 
in the case now before this Court, whether or not a cause 
of action was stated by the complaint was purely a matter 
of state law, which was determined by the State Court 
when it ordered the cause removed and that no evidence 
was necessary to be heard in the Federal District Court 
to determine the issue, and as a matter of fact no evidence 
was considered. We thus find that the reversal of the 
Circuit Court in the Armour case was on a point not 
present in the case now before this Honorable Court. 

Had the respondent been dissatisfied with the decision 
of the State Court, the procedure to follow was to appeal. 
This the respondent did not do and in fact did not ques- 
tion the decision at any time since the order of remand 
from which this appeal is taken was issued upon the 
Federal District Court's own motion. 

To permit a remand under the present state of the 
record would be allowing the Federal District Court to 
overrule the State Court as to what is necessary under 
state law to set out a cause of action in a complaint. 



—12— 

A reading of the complaint fails to show that any indi- 
vidual named as a resident, caused or contributed in any 
manner to the accident upon which the cause of action is 
based. [Tr. of Record pp. 2 to 5.] 

Conclusion. 

Whether an order of remand is such a final order as to 
permit the Court of Appeals to take jurisdiction is to be 
determined by the position in which the parties to the 
litigation find themselves as a result of the order. The 
name applied to the order in itself is of little importance. 
Decisions holding an order of remand not to be a final 
order are merely dictum, in those cases where there was 
no statutory authorization for remand, and in those cases 
decided subsequent to 1875, since there was an express 
statutory provision or prohibition with reference to appeal 
or writ of error. 

The State Court has the power and duty to determine 
whether a complaint states a cause of action under a state 
statute and its decision on this matter of law is final and 
conclusive. The Federal Court is empowered to consider 
evidence and determine questions of fact and matters of 
Federal law but may not by an order of remand reverse the 
decision of the State Court on a matter of state law. 
When a Federal Court so acts, it does so without authority 
and its order is a nullity. 

It would seem that an appeal or writ of error is author- 
ized by inference when the Congress in revising the 
removal statute eliminated the express prohibition against 
writ of error or appeal which had been in existence and 
cited by courts as authority for refusing such writ of 
error or appeal for nearly 70 years. Further, the elimina- 
tion of the provision providing for immediate execution 



—13— 

of the order of remand also indicates the intention of 
Congress not to permit a Federal District Judge to arbi- 
trarily prevent a litigant from exercising his right to re- 
move a cause of action as provided by statute. The com- 
plaint failed to state a cause of action against a resident 
citizen of the State of California. 

It is respectfully requested that the order of remand be 
declared void, or in the alternative the same be vacated 
and the District Court be directed to proceed with the trial 
of the case. 

Respectfully submitted, 

Robert W. Walker, 
J. H. Cummins, 
J. B. Kramer, 

Attorneys for Appellant. 



No. 12169 
IN THE 



United States Court of Appeals 



FOR THE NINTH CIRCUIT 



The Atchison, Topeka and Santa Fe Railway 
Company, 

Appellant, 



vs. 



Clara Brown, a minor, by Jesse J. Brown, Her Guardian 
ad Litem, 

Appellee. 



BRIEF ON MOTION TO DISMISS APPEAL AND 
APPELLEE'S BRIEF. 



Claude A. Watson, 
Edward P. Hart and 
Samuel P. Young, 
1230 West Second Street, Los Angeles 26, 
Attorneys for Appellee. 

HLED 



1AY .2 1 W49 



The Myers Legal Press, Los Angeles. Phone VAndike 9007. 



TOPICAL INDEX 

PAGE 

Appellee's Brief on Motion to Dismiss Appeal 1 

Statement of case 1 

Points presented 2 

I. 

The filing and entering of the dismissal of the action herein 
in the State Court makes it unnecessary to consider the 
questions raised by this purported appeal. Such questions 
now are moot 3 

The order of remand made and entered by the District 
Court and filed and entered in the State Court revested 
the State Court with sole and exclusive jurisdiction of this 
case 3 

II. 
The purported appeal should be ordered dismissed for the 
further reason that an order of remand is not an appealable 
order or decision 4 

The cases cited by appellant in its brief are distinguishable 
and do not support appellant herein for the reason that in 
each case cited the appeal was from a final judgment en- 
tered subsequent to the order of remand. None of the 
cases cited present an appeal from an order of remand.... 6 

The United States Court of Appeals does not have jurisdic- 
tion over an attempted appeal from an order of remand.... 6 



11. 

PAGE 

Reply Brief 9 

Questions presented 9 

I. 
An order of remand by a federal court is not an appealable 
order 9 

II. 

The District Court has exclusive power to determine that a 
case has been improperly removed to that court 11 

III. 
The original complaint states a cause of action against the 
resident defendants as well as against the nonresident ap- 
pellant 12 



111. 
TABLE OF AUTHORITIES CITED 

Cases page 

Barney v. Latham, 103 U. S. 205 12 

Birdseye v. Shaeffer, 140 U. S. 117 6, 8 

City of Louisa v. Levi. 140 F. 2d 668 6, 7 

Employers Corporation v. Bryant, 299 U. S. 374 4 

Gurnee v. Patrick County, 137 U. S. 141 6, 8 

La Bourgogne, 210 U. S. 95 7 

Matthew Addy Steamship, Ex parte, 256 U. S. 417 5 

McAllister v. Chesapeake & O. R. Co., 243 U. S. 302, 61 L. 

Ed. 735 9 

McLaughlin Bros. v. Hallowell, 228 U. S. 278 5 

McLish v. Roff, 141 U. S. 661, 35 L. Ed. 893, 12 S. Ct. 118 10 

Miller and Lux v. San Joaquin, etc. Co.. 120 Cal. App. 589 13 

Morgan v. Thompson, 124 Fed. 203 7 

Moulding-Brownell Corp. v. Sullivan. 92 F. 2d 646 5 

Mutual Life Ins. Co. v. Holly, 135 F. 2d 675 5 

Nashville v. Cooper, 6 Wall. 248 7 

Pullman Co. v. Jenkins, 305 U. S. 534 13 

Railroad Co. v. Wiswall, 90 U. S. 507 .' 4 

Richee v. Gillette, etc. Co., 97 Cal. App. 365 12 

Richmond & Danville R. Co. v. Thouron, 134 U. S. 45 6, 8 

Rogers v. Watson, 46 F. 2d 753 10 

Satterley, In re, 102 F. 2d 144 5, 10, 11 

Scriven v. North, 134 Fed. 366 7 

Skirvin v. Mesta, 141 F. 2d 668 7 

Texas Land & Cattle Co. v. Scott, 137 U. S. 436 6, 8 

Vietti, et al. v. Wayne, et al., 136 F. 2d 771 10 

Wecker v. National Enameling & S. Co., 204 U. S. 176, 51 

L. Ed. 430 9, 10 



IV. 

PAGE 

Wilson v. Republic Iron & S. Co., 257 U. S. 92, 66 L. Ed. 144 

9, 10 

Yankaus v. Feltenstein, 244 U. S. 127 5 

Zadig v. Aetna Ins. Co., 42 F. 2d 142 10 

Statutes 

Code of Civil Procedure, Sec. 581(1) 3 

Judiciary Act of 1875, Chap. 137, 18 Stats. 471 4 

United States Code, Title 28, Sec. 71 5 

United States Code, Title 28, Sec. 1291 4, 7 

United States Code, Title 28, Sec. 1292 4, 7 

United States Code, Title 28, Sec. 1447(e) 3, 8, 11 



No. 12169 
IN THE 



United States Court of Appeals 



FOR THE NINTH CIRCUIT 



The Atchison, Topeka and Santa Fe Railway 
Company, 

Appellant, 

vs. 

Clara Brown, a minor, by Jesse J. Brown, Her Guardian 
ad Litem, 

Appellee. 



BRIEF ON MOTION TO DISMISS APPEAL AND 
APPELLEE'S BRIEF. 



APPELLEE'S BRIEF ON MOTION TO DISMISS 

APPEAL. 

Statement of Case. 

This is an attempted appeal from an Order of Remand 
made and entered by the United States District Court, 
Southern District of California, Central Division, after 
said Court ruled that the cause had been improperly re- 
moved to the District Court from the Superior Court of 
the State of California, in and for the County of Los 
Angeles. [Tr. of Record pp. 36-39.] The original com- 
plaint was filed in the State Court on January 29, 1947 
[Tr. p. 5] for damages for injuries sustained by the 
minor plaintiff on June 13, 1946, who was then 15 years 



— 2— 

of age, and named the appellant corporation, a resident 
of the State of Kansas, and T. F. Robinson, John Doe 
and Jane Doe [Tr. p. 2], employees of the appellant cor- 
poration and residents of the State of California, as de : 
fendants. 

Upon motion of the appellant, made in the State Court, 
and without opposition on the part of the appellee, the 
cause was transferred by the State Court to the United 
States District Court. [Tr. pp. 16-17.] After several 
delays the cause was finally set for trial on December 
14, 1948, at which time the District Court determined 
that the case had been improperly removed from the State 
Court [Tr. pp. 36-39], and that the District Court did 
not have jurisdiction, and upon those grounds ordered 
the case remanded to the State Court. [Tr. p. 30.] Ac- 
cordingly this was done. After appellant commenced this 
appeal, appellee filed a dismissal without prejudice of said 
action, which was entered on the record of said State 
Court. 

Points Presented. 

A. The dismissal of the action involved in this 

PURPORTED APPEAL MAKES THE QUESTIONS RAISED BY 
APPELLANT HEREIN MOOT. 

B. Appellant's purported appeal should be or- 
dered DISMISSED FOR THE REASONS THAT THE PENDING 
ACTION HERE INVOLVED HAS BEEN DISMISSED AND FUR- 
THERMORE AN ORDER OF REMAND IS A NON-APPEALABLE 
ORDER. 



— 3— 

I. 

The Filing and Entering of the Dismissal of the Ac- 
tion Herein in the State Court Makes It Unneces- 
sary to Consider the Questions Raised by This 
Purported Appeal. Such Questions Now Are 
Moot. 

The Order of Remand Made and Entered by the District 
Court and Filed and Entered in the State Court Revested 
the State Court With Sole and Exclusive Jurisdiction 
of This Case. 

Title 28 U. S. C, Section 1447(e), provides, that after 
an order of remand is made: 

'The State Court may thereupon proceed with 
such case." 

After the case was remanded by the District Court to 
the State Court, all subsequent proceedings therein were 
governed by the rules of pleading of the State Court. 
Under the applicable provisions of the State statutes a 
plaintiff may voluntarily dismiss an action at any time 
prior to the commencement of the trial thereon, without 
prejudice to the filing of a subsequent action on the 
same cause of action. Section 581(1) of California Code 
of Civil Procedure provides : 

"An action may be dismissed in the following 
cases: 1. By plaintiff, by written request to the clerk, 
filed with the papers in the case, or by oral or 
written request to the justice where there is no clerk, 
at any time before the actual commencement of the 
trial, . . ." 

The original complaint which was filed in the State Court 
was filed January 29, 1947, covering a cause of action 
which arose June 13, 1946. The case was not set for 
trial until December 14, 1948, at which time the case did 
not go to trial but was remanded to the State Court. 



II. 

The Purported Appeal Should Be Ordered Dismissed 
for the Further Reason That an Order of Remand 
Is Not an Appealable Order or Decision. 

A review of the history of the federal statutes on re- 
moval will show conclusively that no right to appeal from 
an order of remand exists under the present statute. (28 
U. S. C. 1291, 1292.) 

The first statute providing for a remand by the Circuit 
Court (now District Court) to the State Court also pro- 
vided for an appeal or writ of error to the Supreme Court 
from an order remanding the case. (Judiciary Act of 
1875, Chapter 137, 18 Stats. 471.) 

Prior to the Judiciary act of 1875, no appeal or writ 
of error was permitted from an order of remand because 
such an order was not a final decree or judgment. 

In Railroad Co. v. Wiswall, 90 U. S. 507 (1874), the 
Court said: 

"The order of the Circuit court remanding the 
cause to the State court is not a 'final judgment' in 
the action, but a refusal to hear and decide." 

The remedy is not by writ of error. 

In Employers Corporation v. Bryant, 299 U. S. 374, 
at page 378, the Court states: 

"For a long period an order of a federal court re- 
manding a cause to the State court whence it had 
been removed could not be reexamined on writ of 
error or appeal, because not a final judgment or de- 
cree in the sense of the controlling statute." 



— 5— 

The right of appeal from such an order was subse- 
quently removed by statute: Title 28 U. S. C, Section 71 
(1887): 

". . . and no appeal or writ of error from the 
decision of the District Court so remanding such 
cause shall be allowed. . . ." 

The following cases followed this statute: 

Yankaus v. Feltenstein, 244 U. S. 127; 

McLaughlin Bros. v. Hallowell, 228 U. S. 278; 

Ex Parte Matthew Addy Steamship, 256 U. S. 417; 

In re Satterley, 102 F. 2d 144; 

Mutual Life Ins. Co. v. Holly, 135 F. 2d 675 
(C. C. A.) ; 

Moulding-Brownell Corp. v. Sullivan, 92 F. 2d 646 
(C. C. A.). 

Chronologically, prior to the re-enactment of Title 28 
in 1948, the right to appeal from an order of remand 
has been as follows : 

1) Prior to 1875 no right of appeal was ever allowed 
from an order of remand, there being no express statute 
allowing such appeal. 

2) From 1875 to 1887 the right to appeal from such 
an order was expressly allowed and provided by statute. 

3) From 1887 to 1948 the statute expressly provided 
that no appeal could be allowed from such an order. 

4) In 1948 (Title 28) omitted the express provision 
prohibiting an appeal from an order of remand, and made 
no express provision regarding the same. 



From the foregoing it follows that the right to appeal 
from such an order is governed by the same principles 
of law which governed such question prior to 1875, at 
which time no statute provided for or prohibited such an 
appeal, and at which time it was held without exception 
that no right of appeal or review of such an order can be 
allowed, for the reason that it is not a final order, etc. 
(See cases supra.) 

The Cases Cited by Appellant in Its Brief Are Distinguish- 
able and Do Not Support Appellant Herein for the Rea- 
son That in Each Case Cited the Appeal Was From a 
Final Judgment Entered Subsequent to the Order of 
Remand. None of the Cases Cited Present an Appeal 
From an Order of Remand. 

An order of remand, or refusal to remand, has uni- 
formly been held as not being a final judgment: 

Richmond & Danville R. Co. v. Thouron, 134 U. 

S. 45; 
Texas Land & Cattle Co. v. Scott, 137 U. S. 436; 
Gurnee v. Patrick County, 137 U. S. 141; 
Birdseye v. Shaeffer, 140 U. S. 117, and cases too 

numerous to mention. 

The United States Court of Appeals Does Not Have Juris- 
diction Over an Attempted Appeal From an Order of 
Remand. 

The jurisdiction of the federal courts, excepting the 
Supreme Court, are entirely statutory. As stated in City 
of Louisa v. Levi, 14C F. 2d 668: 

'The jurisdiction of the Circuit Court of Appeals 
is purely statutory and such courts are without au- 
thority to review by appeal any decision of the Dis- 
trict Court which is not a final decision . . 



— 7— 

The appellate jurisdiction of the Circuit Court of Ap- 
peals is limited to causes provided by Statute: 
Skirvin v. Mesta, 141 F. 2d 668. 

This limitation on the jurisdiction of the federal courts 
has existed and has been recognized since the inception of 
the inferior federal courts, as stated in Nashville v. 
Cooper, 6 Wall. 248: 

"As regards all courts of the United States, in- 
ferior to this tribunal, two things are necessary to 
create jurisdiction, whether original or appellate. 
The Constitution must have given to the court the 
capacity to take it, and an act of Congress must have 
supplied it. Their concurrence is necessary to vest 
it." (Emphasis added.) 

The appellate jurisdiction of the United States Court 
of Appeals is now expressly limited to final decisions of 
the District Courts and certain interlocutory decisions 
not applicable here. 

28 U. S. C, Section 1291 ; 

28 U. S. C, Section 1292. 

"An order, judgment or decree which leaves the 
rights of the parties to the suit undetermined and 
subject to further litigation — is not a final decision 
and the Circuit Court of Appeals have no jurisdic- 
tion to review it." 

Morgan v. Thompson, 124 Fed. 203; 

Scriven v. North, 134 Fed. 366. 

"A final judgment is one which disposes of the 
whole subject, gives all the relief that was contem- 
plated, provides with reasonable completeness, for 
the giving effect to the judgment and leaves nothing 
to be done in the cause save to superintend, minis- 
terially, the execution of the decree." 

City of Louisa v. Levi, 140 F. 2d 512; 

La Bourgogne, 210 U. S. 95. 



No order of dismissal, nor any other final order or 
decision was ever made in the present case. Nor was any 
order or decision ever made which would in any way 
prevent the plaintiff from dismissing the present action or 
filing a new complaint, or proceeding with the present case.' 
The only effect of the order of remand was to send the 
case back to the State Court. Thereafter the State Court 
retained exclusive jurisdiction and the Federal Court has 
no authority to make any further orders in said action. 
This conclusion is inescapable from the provisions of 
28 U. S. C. Section 1447(e) that "The State Court may 
thereupon proceed with such case." If the order of re- 
mand could be held to terminate the case nothing would 
remain upon which the State Court could act. 

An order of remand, or refusal to remand, have been 
uniformly held not to be final decisions within the mean- 
ing of general appellate jurisdictional requirements: 

Richmond & Danville R. Co. v. Thouron, 134 U. 

S. 45; 

Texas Land & Cattle Co. v. Scott, 137 U. S. 436; 

Gournee v. Patrick County, 137 U. S. 141 ; 

Birdseye v. Shaeffer, 140 U. S. 117; and other 
cases too numerous to mention here. 

For the foregoing reasons appellee respectfully sub- 
mits that the purported appeal herein should be dismissed 
forthwith, and appellee awarded her costs. 



B. 

In the event that the foregoing motion to dismiss the 
appeal pending herein is denied, appellee presents here- 
with her reply brief: 



REPLY BRIEF. 

Questions Presented. 

I. Is an Order to Remand an appealable order? 

II. Does the District Court have the power to de- 
termine that a case has been improperly removed to that 
court ? 

III. Does the original complaint filed in the within 
action state a cause of action against a resident de- 
fendant ? 

I. 

An Order of Remand by a Federal Court Is Not an 
Appealable Order. 

In support of the question presented under this head, 
appellee refers to and incorporates herein the matters set 
out at length infra under Paragraph II of her brief in 
support of her Motion to Dismiss Appeal. 

We will now briefly point out conclusively that the 
authorities cited by appellant in support of this purported 
appeal are not in point and are distinguishable from the 
instant case. 

Appellant appears to concede that an "order of remand" 
is not appealable, but appellant erroneously claims that 
"a refusal to order a remand" has been held to be appeal- 
able, and cites (p. 4 of brief) : 

Wecker v. National Enameling & S. Co., 204 U. 
S. 176, 51 L. Ed. 430, 434; 

Wilson v. Republic Iron & S. Co., 257 U. S. 92, 
66 L. Ed. 144, 148; 

McAllister v. Chesapeake & O. R. Co., 243 U. S. 
302, 61 L. Ed. 735, 738. 



—10- 
In each of these aforementioned cases the appeal was 
not from the refusal to remand, but the appeal was from 
and after a judgment of dismissal of the actions, the 
dismissal having resulted from failure to prosecute fur- 
ther after the parties had refused to submit to the juris-' 
diction of the District Court. 

Appellant also cites authorities (pp. 7 and 8) and er- 
roneously contends that these cases hold that an order 
of remand is a final order. However, these cases merely 
hold that the dismissal which occurred in each case is 
the "final" order, not the remand order. 

Wecker v. National Enameling & S. Co. (supra); 
Wilson v. Republic Iron & S. Co. (supra) ; 
McLish v. Roff, 141 U. S. 661, 35 L. Ed. 893, 12 

S. Ct. Rep. 118; 
Zadig v. Aetna Ins. Co., 42 F. 2d 142; 
Vietti, et al. v. Wayne, et al., 136 F. 2d 771; 
Rogers v. Watson, 46 F. 2d 753, at page 754. 

The case of In re Satterley, 102 F. 2d 144, cited by 
appellant (p. 8), does not hold that an order of remand 
is a decision on the merits, as claimed by appellant herein. 
A mere reading of the opinion will reveal that the opinion 
holds that the trial judge's order of remand is not re- 
viewable, "whether correct or incorrect," and that the 
trial judge is presumed to have considered the question 
of remand on its merits. Nothing contained in that deci- 
sion purports to hold that a remand order is a final judg- 
ment on the merits of the case. As appears at page 144, 
the opinion states: 

''Whether correct or incorrect, the district judge 
expressed his opinion that the case was not one proper 
for removal, and his judgment of remand went upon 
the merits. That judgment is not reviewable in this 
court by any form of procedure." (Emphasis ours.) 

No other cases are cited by appellant. 



—11— 
n. 

The District Court Has Exclusive Power to Determine 
That a Case Has Been Improperly Removed to 
That Court. 

The contention of appellant under Paragraph II (page 
9) of its opening brief that a Federal District Court does 
not have the power to determine that a cause has been 
improperly removed to that court, and upon that ground 
to remand the cause to the State Court, would have the 
effect of nullifying the provisions of the remand statute 
(28 U. S. G, Section 1447) and of compelling the Dis- 
trict Court to proceed with cases over which it did not 
have jurisdiction. The applicable portions of that statute 
are not subject to that construction. 

Title 28 U. S. C, Section 1447(e) provides: 

"If at any time before final judgment it appears 
that a case was removed improvidently and without 
jurisdiction, the District Court shall remand the case. 
A certified copy of the order of remand shall be 
mailed by its clerk to the clerk of the State court. 
The State court may thereupon proceed with such 
case." (Emphasis added.) 

To hold that the District Court is bound by an order 
of a State Court on the question of its jurisdiction would 
render the provisions of Section 1447(e), supra, com- 
pletely inoperative. No such intent can be read into the 
act. In order to give full effect to this section the Dis- 
trict Court must have and does have full power to deter- 
mine whether a case has been removed properly and 
whether it has jurisdiction without regard to any pre- 
vious decision of the State Court. 

As pointed out infra, In re Satterly, 102 F. 2d 144, the 
District Court not only exercised the power of remand 
but such order was conclusive and not reviewable kt whether 
correct or incorrect/' 



—12— 

III. 
The Original Complaint States a Cause of Action 
Against the Resident Defendants as Well as 
Against the Nonresident Appellant. 

The caption of the complaint names as defendants: 
"Atchison, Topeka & Santa Fe Railway Co., a corpora- 
tion, T. F. Robinson, John Doe, Jane Doe, and Doe Com- 
pany, a corporation" [Tr. p. 2], and in Paragraph V of 
said complaint it is alleged that "said defendant (appel- 
lant herein), through its agents, servants and employees, 
acting within the scope of their employment, so negligently, 
carelessly and recklessly operated a certain switch engine," 
etc. 

It is respectfully submitted that from the foregoing it 
may reasonably be inferred that the named individual de- 
fendants are the same persons referred to as "agents, 
servants, and employees" of appellant. 

In Richee v. Gillette, etc. Co., 97 Cal. App. 365, the 
Court held. 

"Where a fact is stated only inferentially and no 
demurrer is interposed, the pleading will be held good 
after judgment." 

The form of the pleadings is immaterial. The Federal 
Court has the right to re-examine the pleadings. In Bar- 
ney v. Latham, 103 U. S. 205, at page 216, the Court, 
in considering the pleadings, said: 

"Those are matters more properly for the deter- 
mination of the trial court, that is, the Federal Court, 
after the cause is there docketed." 

The question of the form of the complaint to state a 
cause of action can only be raised by special demurrer. 



—13— 

In Miller and Lux v. San Joaquin, etc. Co., 120 Cal. App. 
589, the Court states the general rule: 

"A general demurrer or objection to the admis- 
sion of evidence under a pleading on account of its 
insufficiency as a pleading does not reach facts de- 
fectively stated or those set forth by way of infer- 
ence or argument, but only the entire absence of 
any essential fact." 

Such defects can be raised only by special demurrer. 

The question presented upon a petition for removal of 
an action from a State Court to the Federal Court is not 
the sufficiency of the form of plaintiff's complaint but 
whether the complaint sets forth a separable controversy 
between citizens of different states. If one of the de- 
fendants may be a resident of the State a non-separable 
controversy is presented and the case cannot properly be 
removed to the Federal Court: 

Pullman Co. v. Jenkins, 305 U. S. 534. 

Nowhere in the record does it appear and appellant 
does not claim that the appellant's employees, T. F. 
Robinson, John Doe and Jane Doe, were non-residents. 
It is respectfully submitted from the foregoing that the 
present case was improperly removed to the District Court 
and the remand order was properly made, and should be 
affirmed. 

Respectfully submitted, 

Claude A. Watson, 
Edward P. Hart and 
Samuel P. Young, 

By Samuel P. Young, 

Attorneys for Appellee, 



No. 12169 
IN THE 



United States Court of Appeals 



FOR THE NINTH CIRCUIT 



The Atchison, Topeka and Santa Fe Railway 
Company, 

Appellant j 
vs. 

Clara Brown, a Minor, by Jesse J. Brown, Her 
Guardian ad Litem, 

Appellee. 



APPELLANT'S REPLY BRIEF. 



Robert W. Walker, 
J. H. Cummins, 
J. B. Kramer, 
448 Santa Fe Building, Los Angeles 14, 
Attorneys for Appellant. 

JUN IV 

Parker & Company, Law Printers, Los Angeles. Phone MA. 6-9171. 



TOPICAL INDEX 

PAGE 

Statement of the case 1 

Answering Appellee's I. On motion to dismiss appeal 1 

Answering Appellee's II. On motion to dismiss appeal 3 

Answering Appellee's I. Brief on appeal 7 

Title 28, U. S. C, Section 1447 and Section 39, which revised 
and repealed Title 28, U. S. C. A., Sections 71 and 72, had 
the effect of removing the statutory limitation heretofore in 
effect prohibiting appeal or writ of error from an order of 
the Federal District Court, remanding a case to the State 
Trial Court 12 

The complaint at the time the petition for removal was filed, 
failed to state a cause of action against a resident or citizen 
of California 14 

Conclusion 17 

Appendix "A." Affidavit of J. B. Kramer App. p. 1 



TABLE OF AUTHORITIES CITED 

Cases page 

Brown v. Sweet, 95 Cal. App. 117 15 

Campbell v. Jones, 38 Cal. 507 IS 

Chicago & Alton R. R. Co. v. Wiswall (23 Wall. 507), 90 U. S. 

507, 23 L. Ed. 103 6 

Employers Reinsurance Corp. v. Bryant, 299 U. S. 374, 81 L. 

Ed. 289 10, 11, 13 

Hawley Bros. etc. Co. v. Brownstone, 123 Cal. 643 15 

Lester v. Isaac, 63 Cal. App. 2d Supp. 851 15 

Liberty Mutual Insurance Company v. Pillsbury, 154 F. 2d 559 

4, 5 

McAllister v. Chesapeake & O. R. Co., 243 U. S. 302, 61 L. Ed. 

735 7, 9 

McDonough v. Waxman, 103 Cal. App. 169 15 

Metropolitan Casualty Insurance Co. v. Stevens, 312 U. S. 563, 

85 L. Ed. 1044 8 

Moore v. Bessee, 30 Cal. 570 15 

Morton v. Shannon, 26 Cal. App. 689 15 

Murdock v. Mayor, etc., 87 U. S. 590, 22 L. Ed. 429 13 

Pennsylvania Co., Ex parte, 137 U. S. 451, 34 L. Ed. 738 10, 12 

People v. Jones, 123 Cal. 299 15 

Reconstruction Finance Corp. v. Katz, 156 F. 2d 215 4 

Reeves v. Beardall, 316 U. S. 2S3, 86 L. Ed. 1478 3 

Richee v. Gillette, etc., 97 Cal. App. 365 15, 16 

Robinson v. Whaley Farm Corp., 120 Tex. 633, 37 S. W. 2d 714 13 

Schell v. Food Machinery Corp., 87 F. 2d 385 9 

Stewart v. Kahn, 78 U. S. 493, 20 L. Ed. 176 13 

Stringer v. Davis, 30 Cal. 318 15 

Texas Land & Cattle Co. v. Scott, 137 U. S. 436 6 



PAGE 

The Park Square Automobile Station, Ex parte, 244 U. S. 412, 

61 L. Ed. 1231 8 

United States ex rel. Baldwin Co. v. Robertson, 265 U. S. 168, 

68 L. Ed. 962 5 

Wecker v. National Enameling & S. Co., 204 U. S. 176, 51 

L. Ed. 430 7 

Wilson v. Republic Iron & S. Co., 257 U. S. 92, 66 L. Ed. 144.... 7 

Worden v. Searls, 121 U. S. 14, 30 L. Ed. 853 10 

Wright v. Gibson, 128 F. 2d 865 4 

Statutes 

Act of March 3, 1887, Chap. 373, 24 Stat. 553 (28 U. S. C. A., 

Sees. 71, 72) 12 

Federal Rules of Civil Procedure, Rule 62 2 

United States Code Annotated, Title 28, Sec. 39 17 

United States Code Annotated, Title 28, Sec. 1447 11 

United States Code, Title 28, Sec. 71 8, 9, 10, 12 

Textbooks 

8 Bancroft's Code Practice and Remedies, Sec. 6269 4 

10 Cyclopedia of Federal Procedure (2d Ed.), Sec. 4839 3 



No. 12169 
IN THE 



United States Court of Appeals 



FOR THE NINTH CIRCUIT 



The Atchison, Topeka and Santa Fe Railway 
Company, 

Appellant, 
vs. 

Clara Brown, a Minor, by Jesse J. Brown, Her 
Guardian ad Litem, 

Appellee. 



APPELLANT'S REPLY BRIEF. 



Statement of the Case. 

The statement of the case by the appellee conforms to 
that of the appellant except in the following particulars : 

(1) An appeal was perfected, not merely attempted; 

(2) The case was removed from the State Court upon 
petition for removal and not by motion. 

ANSWERING APPELLEE'S I. 
On Motion to Dismiss Appeal. 

The points and authorities in contradiction to this issue 
of appellee are set out in the points and authorities filed 
by appellant in opposition to appellee's motion to dismiss 
appeal, therefore only a few generalizations will be made 
here in summary. Whether the dismissal was effected is 



— 2— 

a matter to be determined by this Court. If the appeal is 
properly taken, then no court save this Court has the 
authority to act upon the case. If the appeal is not prop- 
erly taken, the dismissal still may not be effective if it is 
determined that the District Court acted wholly without 
jurisdiction in entering the order of remand. 

A certified copy of the order of remand was filed in 
the State Court on the date that the order of remand was 
entered in the District Court. This did not allow the ap- 
pellant herein the ten days as provided by the Federal 
Rules of Civil Procedure in respect to final orders (Rule 
62). It would not seem that the appellee should be in a 
better position as a result of a rule violation than if the 
rules had been followed. The appellant therefore was 
not in a position to secure a supersedeas assuming* such 
action were required; however, it would not seem that 
supersedeas would be required in any event since such a 
bond would only prevent execution of the judgment and 
would have nothing to do with the validity thereof. 
Whether the State Court could effectively dismiss the 
case would depend upon the validity of the order of 
remand and if that order should fail by reason of a re- 
versal on appeal, the source of the State Court's jurisdic- 
tion would be defective and any dismissal filed would be 
without effect. In conclusion, it would seem that not only 
is a trial court deprived of jurisdiction of a case when 
same is on appeal but in any event the action of one juris- 
diction may not deprive a court in another jurisdiction of 
its power over a case, assuming that the case is properly 
before the latter court. It is readily seen that if such 
were the case, appeals could at any time be terminated or 
rendered moot, as the appellee contends, by the filing of a 
dismissal by the plaintiff in the trial court and the plaintiff 
may then start again. 



— 3— 

ANSWERING APPELLEE'S II. 
On Motion to Dismiss Appeal. 

Appellee contends that the order of remand is not a 
final order. 

Before discussing the issue, it is believed that a few 
definitions may serve to clarify the problem. The fol- 
lowing definitions are taken from Cyclopedia of Federal 
Procedure, 2nd Edition, Vol. 10, Section 4839: 

"A final judgment, it is sometimes said, is one 
that puts an end to the controversy between the par- 
ties litigant, disposing of the whole merits of the 
controversy or of some independent, unrelated portion 
thereof, leaving nothing to be judicially determined, 
with nothing remaining to be done but to enforce by 
execution what has been determined. Another way 
of stating it is that a judgment is final for the pur- 
pose of appeal when it terminates the litigation on 
the merits and leaves nothing to be done but to 
enforce by execution what has been determined; so 
that if there should be an affirmance by the reviewing 
court, the court below would have nothing to do but 
to execute the judgment or decree it had already 
rendered. In short, a final and appealable adjudica- 
tion is one which involves a determination of a sub- 
stantial right against a party in such a manner as 
leaves him no adequate relief, except by recourse to 
an appeal." 

A judgment may be final and appealable having terminated 
the action as to one claim, and therefore appealable, al- 
though there may remain other claims yet to be deter- 
mined. 

Reeves v. Bcardall, 316 U. S. 283, 86 L. Ed. 1478. 



This Honorable Court has defined a final order in the 
case of Reconstruction Finance Corp. v, Katz, 156 F. 2d 
215, page 217, as follows: 

'The test of finality of a decision other than in. 
the excepted cases is whether an affirmance by the 
appellate court will end the suit and leave nothing 
for the lower court to do but execute the decree. 
* * * A judgment or decree which leaves the 
rights of the parties affected by it undetermined and 
open to further litigation is not a final decision.' " 
(Italics ours.) 

The case of Wright v. Gibson, 128 F. 2d 865, decided 
by this Honorable Court, held that an order or judgment 
dismissing an action was a final order. The Court dis- 
tinguished an order granting the motion to dismiss from 
the order of dismissal holding only the latter to be the 
final order. If we compare the above case with the 
case now before this Court, we find that the Court not 
only granted the order of remand but entered the order, and 
thereupon and on the same day, a copy thereof was sent 
to the Clerk of the State Court. In accord, see also the 
case of Liberty Mutual Insurance Company v. Pillsbury, 
154 F. 2d 559. 

The purpose behind the rule limiting appeals to final 
judgments is to avoid a multiplicity of appeals. This rule 
is commented upon by Bancroft's Code Practice and Rem- 
edies, Vol. 8, Section 6269 as follows: 

"Any other rule would enable a litigant to have 
his rights adjudicated piecemeal, besides delaying 



the trial of the cause, and this the courts will not 
permit unless clearly sanctioned by legislative en- 
actment." 

When we apply this principle of law to the case at 
bar, we find not only is piecemeal appeal being avoided, 
but that the appellant may well lose its right to appeal by 
not appealing at this time, as was done in the case of 
Liberty Mutual Insurance Company v. Pillsbnry, supra. 
Another common test of finality, whether anything 
further is contemplated, is met in this case. The order 
of remand not only having been entered but a copy there- 
of having been mailed to the Clerk of the State Court 
on the date the order was entered, no further action is 
to be anticipated by the Federal District Court. 

It would seem that a dismissal by a court of a cause 
for lack of jurisdiction may be compared to a remand by 
a court for lack of jurisdiction, both from a practical 
as well as from a legal standpoint. The case of United 
States ex rel. Baldwin Co. v. Robertson, 265 U. S. 168, 
68 L. Ed. 962, is a case in which the Supreme Court 
held that a decree dismissing a bill for lack of juris- 
diction is a final decree. In each circumstance the Court 
determined that it was without jurisdiction to litigate the 
case. We are concerned only with the disposal; in one 
instance it is sent to another court, and in the other it 
is merely stricken from the calendar. 

Appellant contends that an order of remand or re- 
fusal to remand has uniformly been held not to be a 
final judgment (Appellee's Brief p. 6). The cases cited 



— 6— 

do not refer to a refusal to remand but do with the ex- 
ception of the case of Texas Land & Cattle Co. v. Scott, 
137 U. S. 436, consider the question of whether an order 
of remand is a final order. This point has been discussed 
by appellant in its Opening Brief Point I, beginning on 
page 3. It is believed that some elaboration will be of 
assistance. The cases cited by appellee all refer back to 
the case of Chicago & Alton R. R. Co. v. Wiswall 
(23 Wall. 507) , 90 U. S. 507, 23 L. Ed. 103. The statute 
with reference to removal proceedings at the time of the 
decision in that case made no provision for remand and, 
as previously pointed out, the order of the Circuit Court 
now District Court, remanding the case served merely to 
inform the State Court that the Federal Court intended 
to take no further action. Because the case was neither 
decided by the Federal Court nor dismissed it in effect 
remained in the Court undecided and therefore the rem- 
edy as stated by the Wiswall case was correctly that of 
mandamus. But since the statute of 1875 there has al- 
ways been a statutory provision authorizing a remand 
and therefore the order of remand not only announces 
the decision of the District Court but in effect moves the 
case from the District Court to the State Court and is 
a disposition of the case, assuming of course, that the 
order of remand is valid. 



—7— 

ANSWERING APPELLEE'S I. 
Brief on Appeal. 

In answer to the contention of the appellee that an 
order of remand is not a final order, the following addi- 
tional material is offered. 

There has never been a statutory prohibition of an 
appeal or writ of error from an order of the Federal 
District Court refusing to remand a case to the State 
Court and appellate review of such orders has been and 
is allowed. 

The above proposition was stated in substance in the 
appellant's opening brief, page 4, in the following words: 

"It will be noted here that there was no prohibi- 
tion for an appeal or writ of error for refusing to 
remand a case and such appeal or writs of error have 
been effected. " 

The following three cases were cited as authority for the 
statement : 

Wecker v. National Enameling & S. Co., 204 U. 
. S. 176, 51 L. Ed. 430, 434; 

Wilson v. Republic Iron & S. Co., 257 U. S. 92, 
66 L. Ed. 144, 148; 

McAllister v. Chesapeake & O. R. Co., 243 U. S. 
302, 61 L. Ed. 735, 738. 

The appellee took exception to the proposition (Appel- 
lee's Brief p. 10) in the following language: 

"In each of these aforementioned cases the appeal 
was not from the refusal to remand, but the appeal 
was from and after a judgment of dismissal of the 



— 8— 

actions, the dismissal having resulted from failure to 
prosecute further after the parties had refused to 
submit to the jurisdiction of the District Court. " 

It is quite apparent that the purpose for which appel- 
lant cited these cases has been misunderstood and a more 
detailed analysis is required. Appellant does not ques- 
tion the fact that the appeals were taken from the orders 
of dismissal. The appeal could not have been taken from 
the order refusing to remand as such an order is inter- 
locutory; however, it will be noted that the appellate 
review was concerned with the validity or the correct- 
ness of the order refusing to remand. The Federal Courts 
were precise in holding that they have the power and will 
exercise appellate review of an order refusing to remand 
a case when that case is brought before the appellate 
court, either following an order of dismissal or any other 
final order. The review would culminate in an affirmance 
or reversal on the jurisdictional issue raised by the re- 
fusal to remand. In this connection see also case of 
Ex parte The Park Square Automobile Station, Petitioner, 
244 U. S. 412, 61 L. Ed. 1231. 

In contrast to the affirmative action taken by the appel- 
late court on orders refusing to remand, the appellate 
courts refused to review an order remanding a case irre- 
spective of the manner in which the case is brought be- 
fore the appellate court. Justice Murphy, in the case of 
Metropolitan Casualty Insurance Co. v. Stevens (1941), 
312 U. S. 563, 85 L. Ed. 1044, draws the distinction in 
this respect between an order remanding the case and an 
order refusing to remand. The opinion is a brief and 
concise analysis of that portion of the old removal statute, 
28 U. S. C, Section 71, with which we are now con- 
cerned. The rule prohibiting appellate review of an order 



— 9— 

of remand is stated by Justice Murphy on page 565, and 
the rule providing that an appellate review may be had 
of an order refusing a remand is set out on page 567. 
See also: 

Schell v. Food Machinery Corp., 87 F. 2d 385, 
page 386. 

Discussing the distinction in the opening brief, ap- 
pellant was not concerned with whether as a matter of 
law either of the two orders compared was a final order 
or interlocutor}/ order, but was only concerned with the 
fact that the appellate court would review the one and 
would not review the other. The comment was directed 
primarily to that portion of old 28 U. S. C. A. 71, which 
prohibits appellate review. 

The Circuit Court has in the past clearly postured the 
case for the Supreme Court. To illustrate this observation 
the attention of the Court is invited to the decision of 
McAllister v. Chesapeake & O. R. Co., supra. The Court 
states that the issue is not whether the case was prop- 
erly dismissed but whether the order refusing to remand 
was a proper order as a matter of law, and did the Dis- 
trict Court have jurisdiction. The Supreme Court re- 
ferring to the opinion of the Circuit Court states at 
page 305 : 

"On the next day the district judge allowed a writ 
of error to this court in an order reciting that plain- 
tiff's petition 'had been dismissed by the judgment 
of this court upon consideration solely of the ques- 
tion of this court's jurisdiction of the action.' " 

The District Court made it clear that it considered only 
the jurisdictional question of refusing to remand even 
though the case had been pending before it for fifteen 
years. 



—10— 

Let us next analyze the distinction between the two 
types of orders, remand and refusal to remand, as the 
distinction may have been effected by the former removal 
statute, 28 U. S. C. A. 71. In brief, the statute pro- 
hibited an appeal or writ of error from an order of 
remand and required that the remand be immediately 
carried into execution. The statute as applied produced 
two results: 

(1) An appeal or writ of error could not be taken 
from the order of remand. 

(2) The order of remand was not subject to appellate 
review. 

The first result is quite clear from the wording of the 
statute. The second result was not clear to the legal 
profession until after the case of Ex parte Pennsylvania 
Co., 137 U. S. 451, 34 L. Ed. 738, reaffirmed and restated 
by the Supreme Court in the case of Employers Rein- 
surance Corp. v. Bryant, 299 U. S. 374, 81 L. Ed. 289. 

These cases refused the writ of mandamus for the rea- 
son and on the principle that appellate review of the 
order of remand was suspended or cut off by the statute, 
basing this conclusion in part on the phrase which directed 
that the order of remand be immediately executed, and 
also to carry out the apparent intent of Congress. 

It is not surprising that there would be considerable 
legal opinion to the effect that an order of remand was 
not a final order because the Statute suspended one of 
the attributes normally found in a final order, namely, ap- 
pealability. This conclusion is believed to result from 
an inadequate consideration of whether an order is final 
or interlocutory since it is generally conceded that it must 
be either one or the other. W or den v. S earls, 121 U. S. 
14, 30 L. Ed. 853. It will be noted that the case of 



—11— 

Employers Re-Insurance Corp. v. Bryant, 299 U. S. 374. 
81 L. Ed. 289, cited by appellee, on page 4, as holding 
a remand not be a final order is actually a qualified state- 
ment. The holding of the Court is qualified by the very 
point now under examination, namely, "in the sense of 
the controlling statute.'' One must conclude that the 
Supreme Court did not wish to make a statement that 
the order was not final as such but only not to be final 
in the sense of the controlling statute, which statute has 
now been repealed. Appealable orders are final. Final or- 
ders are appealable. It does not follow, however, that 
appealability is the sole test for you cannot say that all 
appealable orders are final or that all final orders are 
appealable. There are several interlocutory orders which 
by statute are appealable and by following the line of 
reasoning believed to be faulty the interlocutory order 
would therefore be considered final which is obviously 
not true. The statute did not state that an order of 
remand was not a final order and therefore the deter- 
mination of its final or interlocutory character must be 
determined by the usual tests applied to orders. These 
tests were never previously applied probably because the 
question was moot. The appeal and writ of error of an 
order of remand were prohibited by Statute and there- 
fore the finality of the order was not material to a de- 
termination. 

The statute as it now reads, 28 U. S. C. A. 1447, does 
not prohibit appeal by express prohibition, or suspend 
appellate review by the phrase "such remand shall be im- 
mediately carried into execution." We are thus con- 
cerned with the finality of the order only insofar as the 
timeliness in taking the appeal is concerned. The ques- 
tion is, should the appeal be taken when the order of re- 
mand is issued or at a later date, and not whether such 



—12— 

an order is not subject to appellate review. Since the 
Court previously did not refrain from its appellate review 
of orders refusing to remand when the appellate review of 
such order was not expressly prohibited, we must con- 
clude that under the present statute when such orders of 
remand are not expressly prohibited the power clearly 
lies in the Court and we are only concerned with the pro- 
cedural aspect. 

28 U. S. C, Section 1447 and Section 39, Which Re- 
vised and Repealed 28 U. S. C. A., Sections 71 and 
72, Had the Effect of Removing the Statutory 
Limitation Heretofore in Effect Prohibiting Ap- 
peal or Writ of Error From an Order of the Fed- 
eral District Court, Remanding a Case to the 
State Trial Court. 

Soon after the original Statute prohibiting appeal or 
writ of error had been enacted, the Supreme Court held 
that mandamus was likewise prohibited. This decision is 
a leading case on the problem, being Ex parte Pennsyl- 
vania Co., supra. The case involved a request for man- 
damus to be issued against the judges of the Circuit 
Court (now District Court) to command them to take 
jurisdiction of a case which had been remanded to the 
State Court. The Court after stating that mandamus 
had been the proper procedure in such a case (page 739) 
held that the matter was governed by statute, being the 
Act of March 3, 1887, Chapter 373, 24 Stat. 553. This 
was codified in 28 U. S. C. A. 71, 72. The Court repeated 
the following language of the Statute: 

"such remand shall be immediately carried into exe- 
cution, and no appeal or writ of error from the de- 
cision of the circuit court so remanding such cause 
shall be allowed." 



—13— 

The Court held that the abrogation of the writ of error 
and appeal would have little effect if mandamus were 
permitted. Particularly since the Statute also provided 
that the order should be carried out immediately. The 
Court appeared reluctant to limit the power of appellate 
review and did so only to carry out the apparent inten- 
tion of Congress and to give effect to the words of the 
Statute above quoted. This case has been cited as au- 
thority since that time. A relatively recent case reaffirm- 
ing the Pennsylvania case is that of Employers Reinsur- 
ance Corp. v. Bryant, supra. 

It is a familiar rule of statutory construction that 
Congress is aware of the Court decisions upon a Statute 
and that a revision of the Statute eliminating certain pro- 
visions thereof upon which the Courts have relied and 
based their decisions is an expression on the part of Con- 
gress of an intention to change that portion of the law. 
Stewart v. Kahn, 78 U. S. 493, 20 L. Ed. 176, 178, states 
the rule as follows: 

"It is a rule of law that where a revising Statute, 
or one enacted for another, omits provisions con- 
tained in the original Act, the parts omitted cannot 
be kept in force by construction, but are annulled." 
(Citing cases.) 

In accord: 

Murdoch v. Mayor, etc., 87 U. S. 590, 22 L. Ed. 

429, 438; 
Robinson v. W holey Farm Corp., 120 Tex. 633, 

37 S. W. 2d 714. 



—14— 

The Complaint at the Time the Petition for Removal 
Was Filed, Failed to State a Cause of Action 
Against a Resident or Citizen of California. 

Excluding the formal allegation of the complaint [Tr. 
par. II, p. 2] requesting permission to amend same by 
inserting the true name of the Doe defendants, there is 
no mention of any person or corporation in the com- 
plaint other than the defendant Railway, appellant here- 
in, excepting that found in Paragraph V of the Complaint, 
pages 3 and 4 of Transcript of Record. The pertinent 
portions of Paragraph V read as follows : 

". . . the defendant Atchison, Topeka & Santa 
Fe Railway Co. . . . said defendant, through its 
agents, servants and employees, ... so negli- 
gently, carelessly and recklessly . . ." 

There is no allegation that the agents, servants and em- 
ployees referred to were defendants or that they were 
the persons named in the caption of the complaint. The 
complaint merely alleged that the defendant Railway acted 
through its agents, servants and employees, which as a 
matter of fact is the only manner in which any corpora- 
tion can act. Such pleading is merely a formal allegation 
of appellant's negligence. 

The defendant Railway is set out in the singular and 
it is clearly not a clerical or grammatical error since 
the entire paragraph is in the singular. 

Paragraph VI of the complaint found on page 4 of the 
transcript states: 

"That by reason of the negligent acts of said de- 
fendant . . .", 



—15— 

which it is noted refers to the defendant (appellant here- 
in) in the singular, and still refers only to the defendant 
Railway, making no mention of any other defendants or 
persons and no reference to the defendants named in the 
caption. 

It is a familiar proposition of law that the caption of 
a case is no part of the complaint unless referred to by 
appropriate allegations in the body of the complaint. 

Hazvley Bros., etc. Co. v. Brownstone, 123 Cal. 
643; 

McDonough v. Waxman, 103 Cal. App. 169; 

Morton v. Shannon, 26 Cal. App. 689. 

No such reference is made anywhere in the complaint 
under question. 

It is a general rule that material matters must be dis- 
tinctly stated and may not be left to inference to be 
drawn from doubtful or obscure language. This proposi- 
tion is a direct quote from page 123, from the case of 
Brown v. Sweet, 95 Cal. App. 117, and is a proposition 
of law with little dispute. The following cases support 
the proposition: 

Campbell v. Jones, 38 Cal. 507; 

Stringer v. Davis, 30 Cal. 318; 

Moore v. Bessee, 30 Cal. 570; 

People v. Jones, 123 Cal. 299; 

Lester v. Isaac (1944), 63 Cal. App. 2d Supp. 851. 

The case of Richee v. Gillette, etc., 97 Cal. App. 365, 
is cited by appellee on page 12 of the brief, for the point 



—16— 

that where a fact is inferentially stated, and no demurrer 
is interposed, the pleading will be held good after judg- 
ment. This case is actually not in point with the proposi- 
tions with which we are here concerned. There is no 
allegation in the case at bar from which an inference 
could be drawn. In the Richee case, the question was 
whether or not the sum of attorney's fees was stated with 
sufficient clarity. The Court pointed out that the sum 
asked was ten per cent of the amount found to be due 
on the principal and interest for attorney's fees. The 
uncertainty was more in the nature of an amount, which 
in any event, the Court was required to determine; the 
inference was not as to a material fact. Further, the 
cited case was one which arose after a judgment, and 
where the person requesting the relief might possibly be 
determined to have rested on his rights, whereas, in the 
case under consideration, the defendant and appellant here- 
in, petitioned for removal at the earliest possible time. 

On June 6, 1949, this Honorable Court granted appel- 
lant permission to have this brief considered as a part of 
the proceedings on the motion to dismiss the appeal in 
addition to being the Reply Brief. In this connection 
and in order to establish the fact that the order of remand 
was filed in the office of the County Clerk of the Superior 
Court, on the same day that it was entered, the affidavit 
of J. B. Kramer, attorney for the appellant is attached 
hereto as Appendix "A" and by this reference made a 
part hereof. 



—17— 

Conclusion. 

It is believed that an order of the Federal District Court 
remanding a case to the State Court is an appealable 
order since the order is final. That the statutory pro- 
hibition against appeal or writ of error having been ex- 
pressly repealed by Statute, 28 U. S. C. A., Section 39, 
there is no reason for not allowing appeal in the same 
manner as any other final order. If the Court finds that 
the Federal District Court acted entirely without juris- 
diction in ordering the remand, then it is believed that 
the question of appealability will be satisfied by an order 
of the Circuit Court directing the District Court to pro- 
ceed with the case on the theory that the action of the 
District Court was wholly void. 

It is respectfully requested that the order of remand be 
declared void, or in the alternative the same be vacated 
and the District Court be directed to proceed with the 
trial of the case, and that Appellee's Motion to Dismiss 
the appeal be denied. 

Respectfully submitted, 

Robert W. Walker, 
J. H. Cummins, 
J. B. Kramer, 

Attorneys for Appellant. 



APPENDIX "A" 

Affidavit of J. B. Kramer. 

State of California, County of Los Angeles — ss. 

J. B. Kramer, being duly sworn on oath, deposes and 
says: That he is one of the attorneys of record for the 
appellant in the above entitled action. That a certified 
copy of the order of remand entered by the Honorable 
Judge Ben Harrison [Tr. of Rec. p. 30] was filed with the 
Clerk of the Superior Court in and for the County of 
Los Angeles, State of California, on the 14th day of De- 
cember, 1948. 

J. B. Kramer. 

Subscribed and sworn to before me this 16th day of 
June, 1949. 

Marguerite F. Cripps, 
Notary Public in and for Said County and State. 

My Commission expires January 3, 1952. 



No.12170 






Ctari of Appals 

fur % Nfntlj Olirrtrtt 



PARAMOUNT PEST CONTROL SERVICE, a 

corporation, 

Appellant, 

vs. 

CHARLES P. BREWER, individually and doing 
business as Brewer's Pest Control, ROSALIE 
BREWER, his wife, RAYMOND RIOHT- 
MIRE, CARL DUNCAN and EARL MER- 
RIOTT, 

Appellees. 



GfrattBtrtflt of l&nrxtb 



In Three Volumes 
VOLUME I. 
(Pages I to 266, inclusive) 



■♦ 



Appeal from the United States District Court 
for the District of Oregon j £71 



APR 4- 1949 



No.12170 



(Eonrt nf Kppmin 

fur ilj* mntk Olirrmt 



PARAMOUNT PEST CONTROL SERVICE, a 
corporation, 

Appellant, 

vs. 

CHARLES P. BREWER, individually and doing 
business as Brewer's Pest Control, ROSALIE 
BREWER, his wife, RAYMOND RIGHT- 
MIRE, CARL DUNCAN and EARL MER- 
RIOTT, 

Appellees. 



®mmmpt of %watb 

In Three Volumes 

VOLUME I. 

(Pages I to 266, inclusive) 



Appeal from the United States District Court 
for the District of Oregon 



INDEX 

[Clerk's Note: When deemed likely to be of an important nature, 
errors or doubtful matters appearing in the original certified record 
are printed literally in italic; and. likewise, cancelled matter appear- 
ing in the original certified record is printed and cancelled herein 
accordingly. When possible, an omission from the text is indicated by 
printing in italic the two words between which the omission seems to 
occur.] 

PAGE 

Affidavit Counter to Charles P. Brewer's Affi- 
davit 63 

Affidavit in Response to Order to Show Cause . . 58 

Affidavit in Support of Motion for Restraining 
Order 42 

Answer of Charles P. Brewer, et al 67 

•Answer of Charles P. Brewer to Interrogatories 45 
Exhibit A — List of Customers and Patrons < .,4$ 

Answer of Earl Merriott to Interrogatories. f ... .54 

Answer of Raymond Rightmire to Interroga- 
tories 56 

Answer of Rosalie Brewer to Interrogatories. .52 

Appeal : . . . f 
Clerk's Certificate to Transcript of Rec- 
ord on 91 

Notice of ^ =78 

Statement of the Points on Which Appel- \.'i 
lant Intends to Rely on 537 

Appellant's Designation of Additional Record. 87 



ii Paramount Pest Control Service 

INDEX PAGE 

Appellant's Designation of Record 85 

Appellee's Designation of Additional Portions 

of the Record 86 

Clerk's Certificate to Transcript of Record on 

Appeal 91 

Complaint in Equity 2 

Exhibit 1 — Sales Agent's Agreement with 
Paramount Pest Control 

Service 29 

Deposition of Charles P. Brewer: 

—direct 471 

—cross 528* 

Docket Entries 88 

Findings of Pact and Conclusions of Law 74 

Conclusions of Law 76 

Findings of Pact 74 

Judgment 77 

Memorandum Opinion 73 

Motion for Restraining Order 41 

KFames and Addresses of Attorneys of Record. 1 

Notice of Appeal 78 

Order Denying Motion for Restraining Order. 67 



vs. Charles P. Brewer, et al. iii 

INDEX PAGE 

Order Directing Transmittal of Original Ex- 
hibits 81 

Order Relieving Appellant from Printing or 

Reproducing Exhibits 536 

Order to Show Cause 43 

Photostat Copy of Exhibit No. 77 82 

Points on Which Appellant Intends to Rely ... 78 

Preliminary Memo 66 

Proceedings of Trial 93 

Witnesses for Defendants : 

Brewer, Charles P. 

—direct 264, 451 

—cross 292, 462 

—redirect 322, 465 

Brewer, Rosalie 

— direct 440 

— cross 446 

— redirect 450 

Merriott, Earl 

— direct 434 

— cross 438 

Rightmire, Raymond 

— direct 414 

— cross 425 



iv Paramount Pest Control Service 

INDEX PAGE 

Witnesses for Plaintiff: 

Brooks, DeGrey S. 

—direct 353 

— cross 364 

—redirect 368 

— recross 369 

Bushing, E. W. 

—direct 184 

— cross 202 

—redirect 204, 207 

— recross 205 

Conger, Allard J. 

—direct 323 

— cross 329 

—redirect 330 

Fisher, C. W. 

—direct 338 

— cross 351 

Fisher, Glenn H. 

—direct 399 

— cross 406 

Hansen, G. H. 

— direct 331 

— cross 334 

— redirect 336 

— recross 337 



vs. Charles P. Brewer, et al. y 

INDEX PAGE 

Witnesses for Plaintiff — (Continued) : 

Hilts, Harold W. 

—direct 207, 370 

—cross 253, 386 

—redirect 397, 398 

— recross 398 

Sibert, Theodore C. 

—direct 113 

— cross 172 

Reply to Counter Claim 72 

Statement of the Points on Which Appellant 
Intends to Rely on Appeal; Designation of 
Parts of Record to Be Printed 537 



INDEX TO PROCEEDINGS IN DISTRICT 
COURT AFTER REMAND 

PAGE 

Appeal : 

Certificate of Clerk to Transcript of Record 
on 556 

Designation of Record on (DC) 555 

Notice of 551 

Order Based on Stipulation of Parties includ- 
ing Appeal No. 11892 in Transcript on ... . 560 

Order Relieving Appellant from Printing or 
Reproducing Exhibits on 559 

Statement of Points and Designation of Parts 
of Record on (USCA) 557 

Statement of Points to be Relied Upon by Ap- 
pellant on (DC) 552 

Certificate of Clerk to Transcript of Record on 
Appeal 556 

Designation of Record on Appeal (DC) 555 

Designation of Parts of Record to be Printed 
(USCA) 558 

Findings of Fact and Conclusions of Law 544 

Judgment 550 



11. 

PAGE 

Memorandum Responding to Mandate to Make 
Additional Findings 542 

Names and Addresses of Attorneys 539 

Notice of Appeal 551 

Opinion 540 

Order Based on Stipulation of Parties includ- 
ing Appeal No. 11892 in Present Appeal .... 560 

Order Relieving Appellant from Printing or Re- 
producing Exhibits 559 

Order Vacating Judgment of Feb. 14, 1948 .... 544 

Statement of Points on which Appellant Intends 
to Rely (DC) 552 

Statement of Points and Designation of Record 
(USCA) 557 

Stipulation of Parties including Appeal No. 
11892 in Present Appeal 561 



NAMES AND ADDRESSES OF ATTORNEYS 
OF RECORD 

KENNETH C. GILLIS, 
Central Bank Building, 
Oakland, California 

F. LEO SMITH, 

Pacific Building, 
Portland, Oregon 

ROBERT R. RANKIN, 

Yeon Building, 
Portland, Oregon 

For Appellant. 

COLLIER & BERNARD, 
WM. K. SHEPHERD, 
EARL F. BERNARD, 

Spalding Building, 
Portland, Oregon. 

PLOWDEN STOTT, 

Yeon Building, 
Portland, Oregon, 

For Appellees. 



2 Paramount Pest Control Service 

In the District Court of the United States for the 
District of Oregon 

No. Civ. 3936 

PARAMOUNT PEST CONTROL SERVICE, , 
a corporation, 

Plaintiff, 

vs. 

CHARLES P. BREWER, individually and doing 
business as Brewer's Pest Control, ROSALIE 
BREWER, his wife, RAYMOND RIGHT- 
MIRE, CARL DUNCAN, EARL MERRIOTT 
and all other persons associated with said de- 
fendants as herein described, 

Defendants. 

COMPLAINT IN EQUITY 

Comes now plaintiff and for cause of suit against 
defendants, complains and alleges: 

I. 

Plaintiff is a citizen of the State of California 
and defendants are all citizens of and residents in 
the State of Oregon. The matter in controversy is 
the restraint of unlawful conduct performed by 
the defendants within the District of Oregon, the 
recovery of sums of money due the plaintiff, and for 
damages by defendants, all of which exceeds, ex- 
clusive of interest and costs, the sum of Three 
Thousand ($3,000.00) Dollars. 



vs. Charles P. B reiver, ei ah 3 

II. 

Plaintiff was and at all times since July 1, 1946, 
has been and now is a private corporation, organ- 
ized nnder and existing by virtue of the laws of the 
State of California, with a principal office and place 
of business in the City of Oakland, County of Ala- 
meda, State of California. 

(a) On or about August 25, 1947, said plaintiff 
qualified to do business in the State of Oregon by 
filing a verified declaration of its desire and pur- 
pose to engage in business in said district and state, 
together with a duly authenticated copy of its Char- 
ter or Articles of Incorporation, and did appoint 
a general agent and statutory attorney-in~fa<ct who 
is a citizen of and resident in Multnomah County, 
Oregon, and did pay a fee for the filing of its dec- 
laration and proportionate [1*] part of the an- 
nual license fee for the year ending June 30, 1948, 
all of which was so satisfactory in substance and 
form to the Corporation Commissioner of said 
State of Oregon, that said official did on or about 
August 25, 1947, issue to plaintiff, under his official 
hand and seal, a Certificate of Authority to engage 
in business within the State of Oregon, and said 
corporation did establish a branch office and place 
of business in the said City of Portland. 

(b) In addition to the general powers granted to 
and vested in plaintiff by the statutes of the states 
in which it does business, said plaintiff is, among 
other things, particularly organized for and author- 



* Page numbering appearing at foot of page of original certified 
Transcriot of Record. 



4 Paramount Pest Control Service 

ized by its Articles to carry on the business of struc- 
tural pest control, make inspections, use insecticides, 
fumigants, or allied chemicals for the purpose of 
eliminating, exterminating or preventing infestation 
of insects, rodents and fungi and other pests hir 
vading households or structures, and to buy ingre- 
dients, manufacture chemicals and formulae, use 
and sell the same, together with all kinds of ma- 
chinery or devices for carrying on the business of 
structural pest control, and to create and apply for 
licenses, trademarks and processes, to manufacture 
and sell all types of chemicals and chemical com- 
pounds used in said business, and generally to trans- 
act or carry on any other powers necessary, proper 
or convenient to carry into effect the foregoing 
purposes, including the establishment of branches 
in other states than California, and for more than 
a year last past said plaintiff has been engaged in 
the above described business in the State of Oregon, 
(c) Plaintiff has at substantial expense, at great 
labor and research, coupled with untiring effort, 
assembled for its private and confidential use, a 
large number of most valuable and useful receipts 
and formulae known and used by plaintiff in its 
business, and has acquired valuable and technical 
knowledge and experience necessary and requisite 
for the proper combining, mixing and compounding 
of the same, and knowledge of dependable sources 
of supply for obtaining ingredients and the strength 
and value thereof. For the same period and in the 
same [2] manner and for the purpose of pest con- 



vs. Charles P. Brewer, et at. 5 

trol, it has acquired extensive and valuable knowl- 
edge of various use of its products and the best 
means of distribution thereof to best control all 
kinds of pests in various localities, structures and 
places infested thereby which are dangerous to the 
life, health or property of customers of plaintiff, 
and said antecedent knowledge is essential to the 
successful conduct of such business and particularly 
that of plaintiff, and such knowledge is a valuable 
trade asset of plaintiff and is by plaintiff disclosed 
in whole or in a substantial part to its employees, 
including the defendants above named, at the com- 
mencement of and during their training in behalf 
of plaintiff's business. 

(d) In order to carry on said business in a 
unique, sanitary, safe, efficient and exclusive man- 
ner, plaintiff does 

(i) issue to all agents, employees and repre- 
sentatives certain rules and regulations regard- 
ing its employees, their conduct, the method of 
serving, chemicals and their use and care, and 
the names and addresses of accounts or parties' 
whom the plaintiff is to serve and the contract 
to be made for their particular guidance in said 
business, and plaintiff does require its em- 
ployees to secure from said customers certain 
written contracts for service of customers 
which, among other things, therein describe the 
pest to be eradicated or controlled, the price 
therefor and terms of payment and the period 
during which said service is to continue ; 



6 Paramount Pest Control Service 

(ii) make written agreement, often termed 
a franchise, with its principal agent for the 
sole and exclusive service by said agent to 
plaintiff, which service is confined to a particu- 
lar territory and fully defines the relationship,. 
as more particularly hereinafter disclosed; 

(iii) make agreements with its employees to 
the end that in view of their training by the 
plaintiff, said employees will not give out in- 
formation regarding plaintiff's business, as is 
more fully hereinafter set forth, all of which 
procedure herein described was [3] followed 
and performed by plaintiff in establishing its 
herein described business in the state and dis- 
trict of Oregon; 

(iv) services its patrons with what is collo- 
quially called "one shot service/' meaning iso- 
lated single service, or more often under written 
contracts giving the price, terms of payment, 
duration of service, pest to be controlled and 
period of service. Said contract service greatly 
exceeds the single shot service. All such proce- 
dure was instituted and practiced by plaintiff 
and subsequently usurped, instituted and prac- 
ticed by said defendants in the State of Oregon. 

III. 

All of said defendants were to a greater or less 
extent materially familiar with plaintiff's business, 
as above described, and were associated together 
and more particularly identified in the public and 
customers' minds, as well as among themselves, with 
plaintiff's business in the following manner: 



vs. Charles P. Brewer, et al. 7 

(a) On or about July 1, 1946, plaintiff employed 
and defendant Charles P. Brewer accepted and 
agreed to act as agent for plaintiff in the State of 
Oregon in the business aforesaid, under a sole and 
exclusive franchise to render service for and the 
sale and use of the products of plaintiff in the busi- 
ness aforesaid for a period of ten (10) years after 
said date, cancellable on ninety (90) days' written 
notice by either party, to the effect that the agent 
would devote the whole of his time, attention and 
energies to promote the interests of the company, to 
take all contracts for service in the name of the 
company, to purchase his stocks, merchandise and 
chemicals from the plaintiff, to procure the sales of 
products and promote the service of the plaintiff in 
the territory allotted and to hold confidential the 
information given him in connection with the plain- 
tiff's business, to be responsible for all accounts and 
the collection thereof and not to directly or indi- 
rectly communicate or divulge to anyone or make 
use of any of the trade secrets, formulae, processing 
and service of plaintiff's business for the benefit of 
anyone other than the [4] plaintiff, and to pay a 
proportionate amount of the business to the plain- 
tiff and upon the termination of this agreement and 
for a period of three (3) years thereafter to not 
directly or indirectly communicate or divulge to 
or make use of for the benefit of any person, part- 
nership or corporation any of the trade secrets, 
formulas, processing methods of the company, or 
the names, addresses or requirements of any of the 
customers of the company, or any other information 



8 Paramount Pest Control Service 

relating to the company's business which he may- 
have acquired or learned during his employment, 
and will not canvass, solicit or cater to any of the 
customers of the company which he may know of 
because of his employment by said company, which, 
at all times herein mentioned refers to the plaintiff, 
and which agreement contained other provisions, as 
more fully set forth in that certain " Sales Agent's 
Agreement with Paramount Pest Control Service" 
dated July 1, 1946, made and entered into for a 
valuable consideration, with plaintiff therein called 
the "Company" and defendant Charles P. Brewer 
therein called the "Agent," and subsequently rati- 
fied and confirmed, of which agreement, also called 
"franchise," a substantial copy in words, letters 
and figures is hereto attached and its allegations 
by this reference incorporated herein and made a 
particular part of this paragraph of this complaint 
and for reference marked "Exhibit 1." 

That said agreement was on the following dates 
in the following manner, verbally modified, ratified 
and augmented: 

(i) Defendant C. P. Brewer and plaintiff, through 
its president, on or about September 20, 1946, at 
Portland, Oregon, at the special instance and re- 
quest of defendant Brewer and on his representa- 
tion that it was too difficult to expand said business 
and do all the things he wanted to do to make a 
success of said business in Oregon and yet pay to 
the plaintiff the 20% of the gross business done by 
the agent, as specified in said contract or franchise, 



vs. Charles P. Brewer, et al. 9 

did orally agree to modify said franchise in the fol- 
lowing particulars only, to wit : 

That every time defendant C. P. Brewer took any 
money for his [5] personal use from the business 
done by him under said franchise, he would pay 
to plaintiff a like sum of money; that such an ar- 
rangement would be retroactive to July 1, 1946, and 
continue up to January 1, 1947, by which time de- 
fendant Brewer would be profitably established. 
Such arrangement was made by plaintiff under the 
still continuing' confidence in the ability and in- 
tegrity of defendant Brewer and with the under- 
standing that defendant Charles P. Brewer was 
making and would continue to make a profit and 
would not draw out any money except as said busi- 
ness would warrant said total withdrawal, and in 
all other particulars the provisions in said franchise 
contained would continue in full force and effect. 

Under the above modification, an indebtedness 
from defendant Charles P. Brewer to plaintiff of 
some $1,200 to $1,500 w T as forgiven, the exact 
amount of which is known to said defendant. 

(ii) On January 1, 1947, said franchise was again 
in full force and effect, and during the months of 
January and February of 1947 there became due 
and owing thereunder to plaintiff from defendant 
Brewer the total sum of $994.25 upon which defend- 
ant C. P. Brewer made a payment on February 6th 
of $250.00, and again on March 6, 1947, he paid 
$250.00, making a total of $500.00 payment, and the 
balance of $494.25 was paid March 13, 1947, but 



10 Paramount Pest Control Service 

the franchise obligations for the months of March, 
April, May, June and July, amounting to the sum 
of $2,675.41 were not paid and demand was made 
therefor upon the defendant Charles P. Brewer and 
he refused to pay the same, and on or about June 
20, 1947, at the special instance and request of de- 
fendant Charles P. Brewer and under plaintiff's 
continuing confidence in his sincerity, ability and 
integrity, plaintiff and defendant Charles P. 
Brewer again made a mutual modification of the 
terms of payment of said franchise and did compro- 
mise all sums due under said franchise and its part 
time modification, and agreed that for the period 
from July 1, 1946, to June 30, 1947, the total sum of 
money due, owing and unpaid by defendant Charles 
P. Brewer to plaintiff was $3,359.61, and said com- 
promise was satisfactory [6] and agreed to by the 
defendant Charles P. Brewer, and upon which he 
made a payment of $259.61 on July 9, 1947, and, 
with other credits allowed, left a balance of money 
still due, owing and unpaid by defendant Charles P. 
Brewer to plaintiff of $2,507.41, for which demand 
has been made, and defendant Charles P. Brewer 
has failed, neglected and refused to pay the same, 
(iii) Said franchise agreement had never been 
cancelled by either party and was ratified by pay- 
ments as aforesaid and was from July 1, 1947, up 
to and including August 1, 1947, in full force and 
effect and under the terms thereof defendant 
Charles P. Brewer owed the plaintiff for said month 
of July, 1947, the sum of $478.15 for which demand 
has been made and which is now due, owing and 
unpaid. 



vs. Charles P. Brewer, et al. ll 

(iv) Still having confidence in the ability and 
integrity of defendant Charles P. Brewer and at 
his special instance and request and as an aid by 
the plaintiff to said defendant in building up the 
business to the profit of both parties and because 
defendant Charles P. Brewer complained he could 
not do it alone, plaintiff and defendant Charles P. 
Brewer on or about January 20, 1947, at Portland, 
Oregon, agreed to augment said franchise agree- 
ment with additional help and compensation, and 
mutually and orally agreed as follows: 

Plaintiff would and did send a salesman and serv- 
iceman from its main office at Oakland, California, 
to Eastern Oregon territory to there and then build 
up a mutual business, and plaintiff would pay the 
salaries and expenses thereof in the first instance, 
and any profit or loss and expense of said venture 
would be shared equally between plaintiff and '"de 1 
fendant Charles P. Brewer; v . • 

That the total expense of said- undertaking whs 
$1,921.74 of which defendant's share was $960.87 
and the immediate proceeds from said undertaking 
not including the future benefits to the said business 
thereby established, was $1,317.00 of which plaintiff 
was entitled to one-half or $658.50, or a total amount 
due plaintiff from defendant under this special con- 
tract of $1,619.37, and demand has been [7] made 
for said sum due, owing and unpaid and defendant 
Charles P. Brewer has refused to pay the same. 

(b) That defendants Eaymond Rightmire and 
Carl Duncan are both residents of and inhabitants 



12 Paramount Pest Control Service 

in the State of Oregon and were employed by plain- 
tiff for some time prior to July, 1947, and each for 
himself and as a condition of employment did sign 
and deliver to plaintiff its agreement in writing in 
words, letters and figures substantially as follows, ' 
to wit: 

" Because I do have a limited knowledge of 
the exterminating, pest control, or termite busi- 
ness, and do not know any formulas, processes, 
methods, or other trade secrets, thereof, I agree 
not to give out any learned information such as 
formulas or customs, or to go to work for any 
other pest control firm for a period of three 
(3) years after the termination of my employ- 
ment with this company, in the district in which 
I am now working/ f 

(c) Defendant Rosalie Brewer is now and at all 
times herein mentioned was the wife of the defend- 
ant, Charles P. Brewer, and a resident of and an 
inhabitant in the State of Oregon and was book- 
keeper for said defendant and in partial manage- 
ment of plaintiff's office at Portland, Oregon, and 
in complete management upon the absence of de- 
fendant Charles P. Brewer, and was authorized to 
and did sign checks of the plaintiff, together with 
her defendant husband, and either in whole or in 
part substantially and materially knew all of the 
matters and things herein alleged in connection with 
plaintiff's business and did participate in depriving 
plaintiff of its business, as hereinafter more fully 
alleged. 



vs. Charles P. Brewer, et al. 13 

(d) Defendant Earl Merriott is now and at all 
times herein mentioned has been a resident of and 
an inhabitant in the State of Oregon and was em- 
ployed by plaintiff on or about February 3, 1947, 
through the action of defendant Charles P. Brewer 
who, had he done as required by his agreement, 
would have signed defendant Merriott upon a con- 
tract similar to that of said defendants Duncan and 
Rightmire, but defendant Merriott knew all, or sub- 
stantially all, of the matters and things herein 
alleged and was particularly familiar with formu- 
las, methods, chemicals [8] and service of plaintiff, 
and elected to associate himself with the defend- 
ants, as hereinafter described. 

IV. 

Said defendants were for various periods of time 
prior to August 1, 1947, either in the employment 
or service directly or indirectly of plaintiff and 
thereby possessed of the knowledge of plaintiff's 
business, its chemicals, methods of application, all 
as above described, and all the patrons and cus- 
tomers of plaintiff and their addresses who were 
either under contract with or served by the plain- 
tiff ; that said employment of defendants by plaintiff 
terminated by voluntary act of defendants in ac- 
cordance with the scheme hereinafter described, on 
August 1, 1947, and for some time prior thereto 
and during their employment, the exact time being 
to the plaintiff unknown, defendants and each of 
them with the others did combine, conspire, con- 
federate, agree and cooperate among themselves and 
with each other to do the following things: 



14 Paramount Pest Control Service 

(1) to breach and refuse to perform their indi- 
vidual contracts and agreements or employment 
with this plaintiff and to aid and assist each other 
in such purpose and scheme; 

(2) to acquire for themselves and for the benefit 
of each other and their joint association all the 
knowledge defendants could of plaintiff's business, 
chemicals, formulae, material and methods, as here- 
inabove described, together with the names and ad- 
dresses of all patrons and customers or contacts of 
plaintiff ; 

(3) to serve plaintiff's customers well and thereby 
to build up a good will for themselves thereafter, 
where the customer would know only the attending 
defendant or defendants as the party serving said 
customer in the work of pest control and to thereby 
be able by such personal contact to later acquire 
this account for their own use and benefit and to the 
exclusion of that of the plaintiff; 

(4) for themselves to take over, acquire, hold 
and serve permanently all the customers and pa- 
trons of plaintiff immediately upon the [9] termina- 
tion of their employment which they then and there 
contemplated doing when they had sufficiently estab- 
lished their own good will with customers of plain- 
tiff which was to be done during a period of three 
year* immediately following the termination of 
their employment and to take unto either their 
association or to themselves all money of the plain- 
tiff, its methods, chemicals, systems, service, pa- 
trons, business, equipment and profits and place 
themselves in relation to the customer in the identi- 



vs. Charles P. B reiver, et al. 15 

cal position previously occupied by plaintiff, and 
to do for all customers of plaintiff the identical 
or similar service which they had performed while 
in the employ or association with plaintiff so that 
in the customers' mind there would be no distinc- 
tion in the matter of service ; 

(5) to cause customers or patrons of plaintiff to 
break their contracts with plaintiff or to cease their 
single shot service in favor of themselves and to 
advise and represent to patrons that plaintiff was 
liquidating or going out of business or no longer 
serving them, and that they were taking over the 
business and would carry on in identically the same 
efficient and satisfactory manner as they had pre- 
viously done and to do so quickly and effectively, 
thereby intending to acquire said plaintiff's busi- 
ness prior to the time the plaintiff would have any 
opportunity to reestablish its business, procure the 
necessary trained personnel involved in its service 
and the equipment necessary to serve the customers 
either under contract or single shot service and 
thereby defendants would acquire all the business 
of plaintiff; 

(6) to ignore the territorial limits of said fran- 
chise and go into the states of Idaho or Washington 
and by application of plaintiff's products, methods 
and equipment to establish for themselves a busi- 
ness in said localities ; 

All of which conspiracy, scheme and plan said 
defendants are now performing and carrying into 
effect by their joint and several action. [10] 



16 Paramount Pest Control Service 

V. 

To effect said conspiracy and scheme of self-en- 
richment, defendants, either jointly or severally, 
but always with the purpose of aiding and abetting 
their organization and each other, did do and ac- 
complish the following overt acts, to wit : 

(1) On July 24, 1947, and after defendant 
Charles B. Brewer felt himself sufficiently en- 
trenched in the favor of the customers of said plain- 
tiff, said defendant Charles P. Brewer did in 
writing and without the ninety days' notice specified 
in his contract, make, sign and deliver an instru- 
ment terminating his franchise as of August 1, 
1947, of which the following in words, letters and 
figures is substantially a copy: 

"July 24, 1947. 

"Mr. T. C. Sibert 

638 - 16th St. 

Oakland 12, Calif. 

"Dear Ted: 

"Will you please except my resignation and 
the termination of my franchise as of August 
1, 1947. 

"I will, before August 1, take inventory of 
all supplies and equiptment owned by me, so 
that we will be able to effect a cash settlement 
at that time. If you care to buy my equiptment 
that will be alright with me, otherwise I'll keep 
it as I could maybe use it in the future. 



vs. Charles P. Brewer, et al. 17 

" Please advise me as to whether you want to 
audit the books, or if I should have it done 
here by a registered C.P.A. 
Respectfully yours, 

CHARLES P. BREWER." 

(2) took all the chemicals and equipment previ- 
ously used and continuing to use some parts thereof 
by delivering some and keeping the residue. 

(3) Defendant Charles P. Brewer bought from a 
third party an automobile with plaintiff's money, 
taking the same in his own name and mortgaging it 
to a bank w r hereby repossession by plaintiff was 
prevented, which automobile he continues to use 
in the business of said defendants. 

(4) Defendant, Rosalie Brewer, under the con- 
spiracy and scheme [11] herein described, did make, 
execute and acknowledge on July 30, 1947, a cer- 
tain " Certificate of Assumed Business Name" 
wherein the said Rosalie Brewer (she not being 
under the same contract or franchise with her hus- 
band) did falsely and fraudulently declare that the 
real and true names and post office addresses of the 
persons conducting, having an interest in or intend- 
ing to conduct the business of pest control under 
the name and style of "Brewer Pest Control" lo- 
cated at Portland, Multnomah County, Oregon, 
were the following, to wit: " Rosalie Brewer, post 
office address 4929 Northeast 28th Avenue, Port- 
land, Oregon," which assumed business name de- 
fendants caused to be recorded in Book 61, Record 



18 Paramount Pest Control Service 

of Assumed Business Names of Multnomah County, 
Oregon, at page 212 thereof. 

Subsequently, at an appropriate time, when de- 
fendants felt they were no longer in clanger of any 
action on the part of this plaintiff, the said defend-' 
ant Rosalie Brewer did on, to-wit, August 27, 1947, 
make, sign and acknowledge a "Certificate of Re- 
tirement' ' stating falsely and fraudulent that she 
no longer had any interest or business in "Brewer's 
Pest Control," and concurrently with said defend- 
ant Rosalie Brewer filing her Certificate of Retire- 
ment, the said defendant Charles P. Brewer did 
falsely and fraudulently file a "Certificate of As- 
sumed Business Name" in which he declared that 
the person conducting, having an interest in and 
intending to conduct the business of pest control 
under the assumed business name of "Brewer's 
Pest Control" was "Charles P. Brewer, post office 
address 4929 N. E. 28th Avenue, Portland 11, 
Oregon"; 

All of the above described action being in further- 
ance and execution of the conspiracy and associa- 
tion hereinabove described, and defendant Charles 
P. Brewer continues to operate under said alleged 
assumed name, and all of said defendants have so- 
licited, served and applied plaintiff's methods and 
products under the name of "Brewer's Pest Con- 
trol" or similar identification of their association. 

(5) That the above described action of acquiring 
said business [12] of plaintiff was by defendants 
Charles P. Brewer, Raymond Rightmire and Carl 



vs. Charles P. Brewer, et al. 19 

Duncan done knowingly and intentionally, contrary 
to and in violation of their agreement not to go 
to work for any other pest control firm for a period 
of three years after the termination of their em- 
ployment with plaintiff company in the district in 
which they were working, and defendants Rosalie 
Brewer and Earl Merriott were knowingly and in- 
tentionally aiding and abetting, under their scheme 
and conspiracy for self-enrichment, the said defend- 
ants Charles P. Brewer, Raymond Rightmire and 
Carl Duncan in the manner hereinabove alleged. 

(6) That all of said defendants knowingly and 
intentionally aided defendant Charles P. Brewer in 
the violation of his franchise contract in the follow- 
ing particulars : 

(a) In not serving the Company faithfully, 
diligently and in accordance with his best abili- 
ties in all respects and in not using his 
utmost endeavors to promote the interests of 
the Company; 

(b) did not take all contracts for work and 
service to be rendered by the Agent to custom- 
ers in the name of the Company; 

(c) did not aid in causing the proceeds of 
said service to be paid to plaintiff and did not 
pay any sums arising from said business to 
plaintiff ; 

(d) in not purchasing all of his supplies 
from the plaintiff ; 

(e) did not use every effort in the promotion 
and sale of the products of plaintiff or do what- 



20 Paramount Pest Control Service 

ever was necessary or required by the plaintiff 
to increase the business of said plaintiff; 

(f ) did take from the records of the plaintiff 
the private information of plaintiff, including 
copies of the names and addresses of customers, ' 
and used it against the plaintiff and in further- 
ance of their own business ; 

(g) did not deliver up to the plaintiff on 
demand all of the property, cards, information, 
stock, merchandise, chemicals, equipment or in- 
strumentalities used in connection with said 
business ; 

(h) while making collections, did not make 
himself responsible [13] for all accounts served 
in his territory and for the collection thereof 
and for all men working for or under him in 
said territory ; 

(i) by canvassing, soliciting or catering to 
any and all of the customers of the plaintiff 
which he had known because of his employment 
by said plaintiff; 

(j) by taking to themselves rather than pro- 
tecting trade secrets, formulas, methods, proc- 
esses and the like and all customer lists, 
operation data discovered, acquired or prepared 
during their employment, as the sole property 
of the Company. 

That all of said defendants, since the cessation 
of their employment with the plaintiff and under 
the conspiracy and scheme herein alleged, have 
done the identical or similar service for the de- 



vs. Charles P. Brewer, et al. 21 

fendant Charles P. Brewer or their organization 
which they did and performed for this plaintiff and 
which service is done for their personal and asso- 
ciated enrichment and benefit and have taken unto 
themselves all of the business created by the plain- 
tiff through its agents and employees and intended 
to be and previously acknowledged by said defend- 
ants as the business solely owned and served by 
the plaintiff. 

VI. 

That a full and complete accounting and state- 
ment of the obligations due, owing and unpaid to 
plaintiff from said defendants, individually or €ol- 
lectively, is as follows: 

(1) From Defendant Charles P. Brewer: 

(a) Balance due under the settlement as of 
June 30, 1947, from defendant Charles P. 
Brewer to plaintiff, $3,100,00; 

(b) Due, as aforesaid, on the July 1947 fran- 
chise account, $478.15; 

(c) Investment of plaintiff, which was a total 
investment in furniture, fixtures, equipment 
and tools that were on the territory at the 
time Charles P. Brewer took his franchise and 
which he received, $1,259.63; 

(d) Defendant Charles P. Brewer failed to 
turn in the [14] balance of the assets herein- 
after mentioned and which plaintiff would pre- 
fer in kind, but which was of the reasonable 
sum of $973.00; 



22 Paramount Pest Control Service 

(e) Under the modified agreement between 
defendant Charles P. Brewer and plaintiff 
herein, whereby said defendant was to pay to 
plaintiff the same sum of money that took from 
the business for himself, an accounting has 
disclosed that there were some twenty-one items 
either in his favor personally or charged to ex- 
pense wherein there were no invoices or sup- 
porting data on file in said Brewer's office to 
show that the same were actually paid or that 
they were legitimate expenses of the business 
or otherwise deductible from the earnings of 
the Agent. These amounted to the sum of 



!5.89 and until and unless said defendant 
Brewer properly accounts for the same, they 
are charged against his account as unauthorized 
withdrawals ; 

(f) Under the special agreement hereinbe- 
fore alleged in Paragraph III (a) (iv) on 
page 7 hereof, the sum of $1,619.37 is due, 
owing and unpaid from said defendant Brewer 
to Plaintiff; 

The above liabilities making a total of 
$8,356.34; 

(g) There is to be credited to defendant 
Charles P. Brewer's account the following: 

Accounts receivable not collected by defend- 
ant Charles P. Brewer, as specified in said con- 
tract, but collected by the plaintiff and credited 
to said defendant, $1,297.25 ; 

Inventory turned in by defendant Charles P. 
Brewer of $540.71 ; 



vs. Charles P. Brewer, et at. 23 

Turned in by defendant Charles P. Brewer 
on the original investment of plaintiff in the 
assets, $1,465.71; 

The above credits making a total of $3,303.67, 
and leaving a balance of $5,052.67 due under 
contractual obligation. 

(2) Damage caused by said defendants to this 
plaintiff by virtue of their conduct, as hereinbefore 
described, includes the following: 

(a) When said defendants started to usurp 
and take over all [15] of plaintiff's contracts, 
plaintiff sent men into said territory to inter- 
view and hold such accoimts as plaintiff could, 
and the action of said defendants, as herein de- 
scribed, damaged plaintiff in the amount of said 
expense, consisting of $3,596.95. 

(b) There were unexpired contracts between 
plaintiff and its customers which were taken 
over and served by the defendants, which con- 
tracts were in writing and signed for a year 
but which, before their unexpired period had 
run, were cancelled by customers because de- 
fendants were serving them, and the sum of 
money lost by virtue of the cancellation of said 
contracts because of the action of said defend- 
ants, is the sum of $2,481.50. 

(c) There were other contracts between 
plaintiff and its customers which were in writ- 
ing and the original term thereof had expired, 
but which written contracts provided that the 
terms of said written agreement with the cus- 



24 Paramount Pest Control Service 

tomer were to continue after the expiration 
of the original term " until cancelled in writing 
by either party,'' and said contracts were not 
cancelled in writing or otherwise until the de- 
fendants themselves, by their concerted action,' 
usurped and took over the service covered in 
said written agreements, and the damage occa- 
sioned by defendants to plaintiff in taking over 
such service represented a sum of $775.00. 

(d) When said defendants, by their con- 
certed action, took over the business of plaintiff 
in Oregon and other localities, men who were 
trained and valuable to the plaintiff's service 
in California and Washington were taken away 
from their respective localities and the business 
of this plaintiff and sent to Oregon for the pur- 
pose of serving plaintiff's business here, and 
in this process the plaintiff lost money which 
constitutes an item of damage occasioned by 
these defendants against this plaintiff and which 
item of damage, if it is ascertainable, should be 
included herein as a claim against said defend- 
ants, and unless the same is ascertainable (and 
at the present time plaintiff has no means of 
definitely ascertaining this amount), it is al- 
leged that this [16] certain damage, but in- 
definite in amount, constitutes an additional 
grounds for injunction and equitable relief. 

(e) That the defendants, and each of them, 
have been actively engaged since August 1, 1947, 
and prior thereto, in taking away the business 



vs. Charles P. Brewer, et cti. 25 

and accounts, either under contract or single 
shot, of plaintiff, in violation of their three- 
year non-competitive agreement, as herein de- 
scribed, and plaintiff alleges that this damage 
has amounted to approximately the sum of 
$1,500.00 per month, or a damage of a total 
amount of $4,500.00 to the present date and 
continuing, and increasing as long as defend- 
ants are permitted to operate under said con- 
spiracy. 

VII. 

(a) Plaintiff has either performed and there has 
occurred all conditions precedent to the bringing of 
this suit or defendants' conduct has made the same 
impossible or unnecessary. 

(b) Plaintiff has set forth herein the names and 
activities of all parties known to it as participating 
in the conspiracy, and alleges that it is informed 
and believes that there are others connected with 
said defendants in this conspiracy, but whose names 
and addresses are not known at this time to ; this 
plaintiff. 

VIII. 
In addition to the sums of money due and the 
damages occasioned to plaintiff by defendants 
jointly and severally as above described, said de- 
fendants have jointly and severally caused damage 
to plaintiff which is difficult and impossible of ascer- 
tainment because of the nature of defendants' ac- 
tions, and has caused plaintiff to expend large sums 
of money in the protection of its rights, and unless 



26 Paramount Pest Control Service 

restrained by action of this Court, said defendants 
will jointly and severally continue in said course 
of conduct and create further irreparable cost and 
damage to plaintiff; that plaintiff has no plain, ade- 
quate or speedy remedy at law, but only in this 
court of equity. 

Wherefore, Plaintiff Prays a judgment of this 
Honorable Court as [17] follows: 

(1) For a temporary restraining order, enjoining 
said defendants and all persons now unknown to 
plaintiff and similarly engaged with defendants, as 
herein described, and each of them, from continuing 
their unlawful and unconscionable conduct, all as 
above mentioned, and, upon final hearing of this 
cause on the merits, that said temporary restraining 
order be made a permanent injunction against de- 
fendants and each of them under penalty of con- 
tempt of court if defendants, or either of them, 
continue in said practice herein described or in con- 
flict with their agreements; 

(2) Against said defendants, and each of them, 
for such sums of money as the Court may find are 
due, under the above allegations, to plaintiff either 
under contract or in damages, and to pay over to 
plaintiff all the gains, profits and advantages de- 
rived by defendants, or either of them, from their 
unlawful conduct, as herein described, or such sum 
of damages as the Court finds proper; 

(3) Requiring defendants to specifically perform 
said agreement in delivering up to this plaintiff all 
merchandise, stock, chemicals, equipment, formulas 



vs. Charles P. Brewer, et al. 27 

and secret trade information used exclusively in 
the above described business of plaintiff and 
acquired at great expense by plaintiff and xjrotected 
by contract from falling into the hands of unscrup- 
ulous and unlawful competitors, and that the same 
be impounded in court during the pendency of this 
action ; 

(4) For plaintiff's costs herein; and 

(5) Such other, further or different relief as to 
this Honorable Court may seem just and equitable 
in the premises ; 

(6) Plaintiff demands of defendants, and each of 
them, that within fifteen (15) days from the service 
hereof, each of said defendants make the following 
answers separately and fully, in writing and under 
oath, for the purposes of this action only and subject 
to all pertinent objections to admissibility which 
may be interposed at the trial : 

(a) That each of the following documents pleaded 
in this [18] Complaint are genuine: 

(i) the contract or franchise of July 1, 1946, 
between plaintiff and defendant Charles P. 
Brewer, hereto attached as "Exhibit 1"; 

(ii) the agreement between plaintiff and em- 
ployees, as described in Paragraph III (b) on 
page 8 hereof ; 

(iii) the letter of resignation, as described in 
Paragraph V on page 11 hereof. 

(b) That each of the following statements are 
true: 

(i) That defendants are jointly and severally 
(1) soliciting or (2) serving customers or 



28 Paramount Pest Control Service 

patrons for pest control service who were for- 
merly (1) under contract with plaintiff for 
similar service or (2) who were served by plain- 
tiff for pest control. 

(ii) That upon service of customers by the' 
defendants, or either of them, the defendants 
used the following notice : 

' ' Patrons 

This establishment inspected and serviced 

each month for disease carrying pests 

By 

Brewer's Pest Control 

State-Wide 

4929 N. E. 28th Avenue, Portland 11, Oregon 

1947 WEBster8082" 

(c) Submit a list of all patrons and customers 
and their addresses served by defendants, or either 
of them, and whom they are now serving or have 
served since August 1, 1947, in the matter of pest 
control. 

Dated at Portland, Oregon, this 22nd day of 
October, 1947. 

KENNETH C. GILLIS, 
F. LEO SMITH, 
ROBERT R. RANKIN, 

Attorneys for Plaintiff. 
[Endorsed] : Filed October 24, 1947. [19] 



vs. Charles P. Brewer, et al. 29 

EXHIBIT No. 1 

SALES AGENT'S AGREEMENT WITH PARA- 
MOUNT PEST CONTROL SERVICE 

This Agreement executed in duplicate at Oak- 
land, California, this 1st day of July, 1946, by the 
Paramount Pest Control Service, a corporation, 
hereinafter called the Company, and Charles P. 
Brewer of Portland, Oregon, hereinafter called the 
Agent, 

Witnesseth : 

1. The Company hereby grants to the Agent, and 
the Agent does hereby accept the sole and exclusive 
franchise to represent the Company in rendering 
services for and selling and using the products of 
the Company in that certain territory described as 
follows, to wit: The entire State of Oregon. Any 
deviation shall be in writing with Franchise holders 
of adjoining states, a copy of which must be sent to 
Company. 

It is understood and agreed that this franchise 
only covers such services and products as can .be 
rendered, used and sold by Agent under a Group 
"E" Owners and Operators License issued by the 
State of California, and that nothing herein con- 
tained shall prevent Company from rendering, using 
and selling services and products of the Company 
in said territory which are not covered by said Group 
"E" Owners and Operators License, or which can- 
not be rendered, used or sold by Agent by reason of 
the limitations of said License. 



30 Paramotmt Pest Control Service 

It is agreed, however, that if and when Agent 
secures a License to render services for and to use 
and sell products of the Company in addition to those 
covered by Group U E" Owners and Operators Li- 
cense, that Agent shall then have the right to [20]' 
and he is hereby granted the Exclusive Franchise 
under the terms and conditions of this contract for 
such additional services and products. 

2. This Agreement shall become effective on the 
1st day of July, 1946, and shall, unless sooner ter- 
minated as herein provided, continue in full force 
and effect for a period of ten (10) years from said 
date. Said agreement may be cancelled by either 
party at any time on ninety days' written notice to 
the other. At the end of said period of ten (10) 
years provided for herein, in the event that all of 
the terms and conditions of this agreement have 
been kept and performed, said agreement shall 
thereby be automatically renewed for the same 
period of years as originally granted for, and there- 
after shall continue for successive like periods un- 
less cancelled, as provided herein. 

3. The Agent shall devote the whole of his time, 
attention and energies to the performance of such 
duties as may from time to time be assigned to him 
by the Company, and shall not either directly or in- 
directly, alone, or in partnership, be connected with 
or concerned in any other business or employment 
whatsoever during the said term of his employment, 
and shall serve the Company faithfully, diligently 
and according to his best abilities in all respects, 
and use his utmost endeavors to promote the inter- 
ests of the Company. 



vs. Charles P. Brewer, et al. 31 

4. All contracts for work and services to be ren- 
dered by Agent to customers shall be taken in tlie 
name of the Company, the original of said contract 
shall, upon its execution, be forwarded to the Com- 
pany, the Agent retaining a Copy and the Customer 
being [21] furnished a copy. 

5. Agent agrees to pay Company in the mariner 
hereinafter provided for such Franchise twenty 
(20%) per cent of the gross business done by Agent. 
As compensation for his services, Agent shall retain 
all gross profits over said twenty per cent (20%) 
above mentioned. 

6. Prom his compensation, Agent agrees to pay 
the following expenses of maintaining said business 
in said territory, namely: 

a. Wages Service 

b. Materials & Expense Service 

c. Wages Salesmen 

d. Commissions 

e. Advertising 

f. Auto Expense — Gas, Oil & Eepairs 

g. Depreciation 
h. Insurance 

i. Taxes & Licenses 

j. Traveling Expense 

k. Wages Office 

1. Bad Debts 

m. Donations 

n. Gas Light & Water 

o. Legal & Accounting 

p. Miscellaneous Expense 



32 Paramount Pest Control Service 

q. Office Expense — Stationery, Printing & 

Supplies 

r. Telephone & Telegraph 

s. Discounts & Allowance — Received 

t. Profit & Loss on Sales of Capital Assets 

u. Tithing 

v. Discounts & Allowance — Paid 

w. Interest Paid 

together with such other expense as in the judgment 
of the Company should be charged against said 
business. 

7. Company agrees that from the amount due 
the Company under paragraph 5, there shall be 
deducted an amount equal to ten per cent (10%) 
thereof, which shall be paid to the Christian Service 
Foundation, a non-profit charitable organization. 
Agent agrees that from the monthly net profit of 
said business shall be deducted an amount equal to 
ten per cent (10%) of said net profit, [22] which 
shall be paid to said Christian Service Foundation. 

8. Agent shall open a bank account in the name 
of the Company and shall deposit therein all moneys 
received by him in connection with said business. 
Moneys shall be drawn out of said account only 
upon the signature of Agent and some employee of 
Agent, to be designated by Agent. 

9. Agent shall keep books of account showing 
all transactions in said business. Said books shall be 
opened by Company Auditor and shall then be main- 
tained to conform with the systems used by Com- 
pany and as directed by said Auditor. Agent agrees 



vs. Charles P. Brewer, et ah 33 

that all times the representatives of the Company 
shall have free access to the offices of Agent and to 
all books, records, materials and documents used 
by said Agent in connection with the business cov- 
ered by this contract. 

10. The Company Auditor shall audit the books 
of Agent immediately after the last day of each and 
every month during the life of this contract, and 
prepare a statement of the business done during the 
previous month by Agent, together with a profit 
and loss statement for said previous month. Upon 
the completion of said statement and presentation of 
a copy thereof to Agent, said Agent agrees to forth- 
with deliver to said Auditor a check payable to 
Company for the amount due Company under said 
statement, less ten per cent (10%) thereof; a check 
payable to Christian Service Foundation for the ten. 
per cent (10%) of the amount due Company under 
said statement, and a check payable to Christian 
Service Foundation for an amount equal to ten pei* 
cent (10%) of agent's net profits, as shown by said 
statements. Said checks, in any event, must be de- 
livered on or before the 10th day of the month in 
which they are due. It is agreed by both parties 
that the decision of the Auditor as to the correctness 
of said statement and of all items listed thereon 
shall be final and conclusive as [23] to both parties. 

11. Agent shall be allowed deductions from gross 
business acquired in any one month as shown by his 
books for cancellations of any business, and allow- 
ance slips duly allowed. These deductions shall be 



34 Paramount Pest Control Service 

made from the gross business of the next succeed- 
ing month after the month when such cancellations 
or allowance slips occur. 

Agent shall stand all loss for failure to make col" 
lections. 

12. The Agent shall maintain an office in his ter- 
ritory and shall cause the name of the Company, as 
well as his own, to be properly listed in the local 
telephone directory in the classified section thereof, 
and shall display upon the windows of any office the 
name of the Company as well as his own name, as 
Agent. At the time of signing of this agreement, the 
Company agrees to furnish him with such trucks 
and equipment as in its judgment is necessary for 
his use. Thereafter Agent agrees to purchase on his 
own account such additional trucks and equipment 
as shall be necessary to handle his said business. 

13. Upon the signing of this contract, Agent 
agrees to purchase from Company such stock, mer- 
chandise, chemicals and materials as will provide 
him with such quantity of each as will meet the 
needs of his business for the next succeeding thirty 
days and that he will continue to maintain such 
quantities of each as will meet the needs of his 
business for a thirty day period. Notice of his in- 
tention to purchase any of the above must be given 
at least thirty days in advance of the delivery date. 

14. The Agent agrees to use every effort in the 
promotion and sale of the products and services of 
the Company in the above territory and do what 
ever shall be necessary or required by the Company 
to increase the business of said Company in said 
territory. 



vs. Charles P. Brewer, et al. 35 

15. Each of the parties hereto shall be excused 
from the performance of the terms and conditions 
herein contained, and this agreement and all the 
terms and conditions herein contained are subject 
to such interference, interruption or cessation as 
may be caused by acts of God, strikes, lock-outs, 
floods, boycotts, picketing, acts of the public enemy^ 
governmental priority regulations, laws, regulations 
or executive orders of the Government of the United 
States, or any other cause or condition over which 
the party has no control. 

16. The Company agrees to furnish the Agent 
all advertising matter, contract forms, letterheads 
and any other printed matter which, in the opinion 
of the Company, is necessary in the operation of the 
business of the Agent, and which Agent agrees to 
pay for. All advertising, window displays and list L 
ings shall conform to the methods as given to him, 
by the Compan}^. 

17. It is expressly understood and agreed by the 
Agent that all of the rules and regulations of the 
Company which are now printed and in full fo ; rc6 
and effect, or any amendments that may be : made 
hereafter, or any subsequent rules and regulations- 
made by the Company, shall be and they are hereby 
declared a part of this contract and' binding upon 
the Agent, and the Company agrees to furnish -thfe 
Agent with a copy of any rules and regulations now 
in force, and to immediately furnish him with any 
amendments or new rules and regulations that mey 
be hereafter adopted. [25] 



36 Paramount Pest Control Service 

18. The Agent agrees to at all times keep intact 
all of the Communications and other material given 
to him by the Company as confidential information, 
and that in the event of the termination of this 
agreement he will surrender all of the same to the' 
Company or its designated agent, and will not at or 
subsequent to the termination of this agreement 
divulge such confidential information to anyone out- 
side of the organization. 

19. Any notice to be given under the terms of 
this agreement by the Company to the Agent may 
be given by placing the same in a sealed envelope 

addressed to the Agent at , and said sealed 

envelope containing the notice so addressed, with 
postage thereon prepaid, shall be deposited in the 
United States Post Office at Oakland, California or 
any other place. In the event that the principal 
place of business of the Agent may be changed, and 
the Company is notified of said fact prior to the 
mailing of any notice under this agreement, then 
said notice shall be sent to the address where the 
principal place of business is then located. Upon 
such deposit being made, as aforesaid, the notice 
shall, for all purposes of this agreement, be com- 
plete. 

20. In the event of the termination of this agree- 
ment, Agent promises and agrees to surrender and 
deliver to the Company, upon demand, possession of 
the office, all of the records, cards, information, 
stock, merchandise, chemicals, equipment and any 
and all instrumentalities connected with and used 
in his said business. Said demand may be made at 



vs. Charles P. Brewer, et al. 37 

any time after notice of termination is received or 
served. 

21. Should Agent own the real property and 
building in which his said office is located at the time 
of the termination of this agreement for any cause, 
then said Agent agrees to and does [26] hereby 
grant Company the right and option, for a period 
of ninety days after the termination of this con- 
tract, to purchase said property at the fair market 
value thereof. 

22. In the event of the termination of this agree- 
ment the Company agrees to pay Agent, or his legal 
representatives, the cost of all stock, merchandise, 
chemicals and equipment owned by Agent and used 
in connection with said business, less any deprecia- 
tion on same that appears on the books. 

23. Neither this agreement nor any interest 
therein shall be assignable at the hands of said 
Agent, except as hereinafter provided, and in the 
event any assignment is made by the Agent for the 
benefit of creditors, or if said Agent be adjudged a 
bankrupt, whether voluntary or involuntary, or if a 
receiver be appointed in any proceedings against 
the Agent, this agreement and all the rights of the 
Agent thereunder shall immediately terminate. 

24. Agent agrees to cover his employees and 
property with all necessaiy fire, theft, liability and 
compensation insurance with proper policies, to be 
approved by Company, and further agrees to take 
out such other insurance as Company shall deem 
necessary, all to be paid for by Agent, and which 
shall be included as an expense against his said 
business. 



38 Paramount Pest Control Service 

25. The Agent agrees that he will not at any 
time during the life of this agreement mortgage, 
hypothecate, pledge or seek to encumber any mer- 
chandise, personal property or equipment in his 
possession consigned to him by the Company. 

26. Agent agrees that he will at all times conduct 
his business in accordance with and conform to all 
municipal, county, state and federal statutes, laws, 
ordinances, regulations and executive orders. [27] 

27. It is agreed that the laws of the State of 
California shall govern any and all questions that 
at any time may arise concerning the validity, con- 
struction or interpretation of this agreement, or any 
provision thereof, and the parties hereto agree that 
should any civil action be filed upon this agreement, 
or for any violation thereof, that the same shall be 
filed in the Superior Court of the State of Califor- 
nia, in and for the County of Alameda, which said 
Court is hereby given exclusive jurisdiction of any 
such action. Time is expressly agreed to be of the 
essence thereof. 

28. A waiver by the Compam^ of any branch or 
any term or condition of this agreement shall not be 
construed in any way as a waiver of a further, like, 
or other breach of this agreement. 

29. The Company reserves the right to interview 
and be satisfied with and approve all persons em- 
ployed by the Agent in his territory, and the Agent 
agrees that he will not employ any person without 
first securing the approval of said Company. Agent 
agrees to discharge any person employed unsatis- 
factory to Company, on demand. 



vs. Charles P. Breiver, et al. 39 

30. The Agent agrees to be responsible for all 
accounts served in his territory, for the collection 
of all accounts in his territory, and for all men work- 
ing for and under him in said territory. 

31. The Agent further agrees that for a period 
of three years after the termination of this agree- 
ment, or his period of employment, he will not, di- 
rectly, or indirectly, communicate or divulge to or 
make use of for the benefit of any person, partner- 
ship or corporation any of the trade secrets, for- 
mulas, processing methods of the Company, or the 
names, addresses or requirements of any of the cus- 
tomers of the Company, or any other information 
related [28] to the Company's business which he 
may have acquired or learned during his employ- 
ment. The Agent further agrees that he will not, 
either as an employee, employer or otherwise, can- 
vass, solicit or cater to any of the customers of the 
Company, which he may know of because of his em- 
ployment by said Company. 

32. The Agent further agrees that all trade se- 
crets, formulas, methods, processes and the like, and 
all customers' lists, operation data, discovered, ac- 
quired or prepared during his employment, and con- 
nected with the business of the Company shall be 
the sole property of the Company. 

33. The Agent further agrees that he will submit 
the necessary information for obtaining a surety 
bond in such proportion as the Company may re- 
quire, and furnish said bond upon demand of the 
Company. The Company agrees to pay the premium 
on said bond. 



40 Paramount Pest Control Service 

34. Should the Agent die during the life of this 
agreement and leave a will designating a person 
whom he desires to have carry on the services pro- 
vided for in this contract, and providing any condi- 
tion or limitation upon same in said will, the 
Company agrees that it will enter into a contract 
similar in form and effect to the within contract 
with such person, and changed only by the condi- 
tions or limitations provided in said will, providing 
the new man is satisfactory to the Company. 

35. The Company shall he the exclusive judge 
of whether the Agent is complying with all the 
terms and conditions of this agreement, and its 
decision in this matter shall be final and conclusive 
as to that fact. 

36. This agreement shall be binding upon the 
heirs, executors, administrtaors and assigns of the 
parties hereto. [29] 

In Witness Whereof, the parties hereto have here- 
unto set their hands and seals the day and year first 
above written. 

PARAMOUNT PEST 
CONTROL SERVICE, 
a Corporation, 
By /s/ G. H. FISHER. 

/s/ CHARLES P. BREWER, 
Agent. [30] 



vs. Charles P. Brewer, et al. 41 

[Title of District Court and Cause.] 

MOTION FOR RESTRAINING ORDER 

Comes Now the plaintiff above named, appearing 
by its attorneys, Kenneth C. Gillis, F. Leo Smith and 
Robert R. Rankin, and move the above-entitled court 
for an order restraining said defendants from a con- 
tinued operation and practice, as more fully de- 
scribed in the Complaint herein ; and 

Moves that this Court issue an Order to Show 
Cause, fixing a time and place for hearing, why the 
defendants and each of them should not be so 
restrained. 

This motion is based on 

(1) The verified Complaint filed herein and ref- 
erence to which is hereby made ; 

(2) The affidavit of T. C. Sibert, President of the 
plaintiff corporation, and attached to this 
Motion ; 

(3) The Rules of Civil Procedure for the District 
Courts of the United States ; and 

(4) On statutes and authorities in interpretation 
thereof. 

Dated at Portland, Oregon, this 22nd day of 
October, 1947. 

KENNETH C. GILLIS, 
F. LEO SMITH, 
ROBERT R. RANKIN, 
Attorneys for Plaintiff. 

[Endorsed] : Filed October 24, 1947. [31] 



12 Paramount Pest Control Service 

[Title of District Court and Cause.] 

AFFIDAVIT IN SUPPORT OF MOTION FOR 
RESTRAINING ORDER 

State of California, 
County of Alameda — ss. 

I, T. C. Sibert, being first duly sworn, depose 
and say: 

That I am the President of the plaintiff corpora- 
tion; that I have read and verified the Complaint 
herein; that I know its contents and the allegations 
therein contained, and that the same are all true as 
I verily believe ; 

That the defendants, in the manner in said Com- 
plaint described, are doing substantial damage to 
the plaintiff, and three of them were under contract 
to refrain from doing the very things they are doing, 
and the other two defendants have knowledge. I 
verily believe, of all that has transpired and yet 
continue to aid and abet the other defendants in the 
conspiracy alleged, and do so for their joint and 
several enrichment and the acquiring of plaintiff's 
business, as more fully detailed and set forth in said 
complaint; that knowing the character of the de- 
fendants involved and their program and their past 
practice, I firmly believe that they will continue in 
this course of conduct to the plaintiff company's 
irreparable damage unless they are restrained by 
this court; that a temporary restraining order is 
requested for the purpose of protecting this busi- 



vs. Charles P. Brewer, et al. 43 

ness, to last until the hearing of this case upon the 
merits. 

Further, deponent sayeth not. 
/s/ T. C. SIBERT. 

Subscribed and sworn to before me this 22nd day 
of October, 1947. 

[Seal] /s/ KENNETH C. GILLIS, 
Notary Public in and for the County of Alameda, 
State of California. 

My Commission expires December 8, 1950. 

[Endorsed] : Piled October 24, 1947. [32] 



[Title of District Court and Cause.] 

ORDER TO SHOW CAUSE 

Upon reading plaintiff's verified complaint filed 
herein and its motion for a temporary restraining 
order pendente lite, together with the affidavit at- 
tached to said motion, and the Court being satisfied 
that there is reason for the issuance of this Order 
to Show Cause herein ; 

It is now hereby Ordered that defendants, and 
each of them, above named appear before this Court 
at its courtroom in the United States Court House 
at Main Street, between Sixth Avenue and Broad- 
way, in the City of Portland, County of Multnomah, 
State of Oregon, on Monday, the 17th day of No- 



44 Far amount Pest Control Service 

vember, 1947, at the hour of 10 o'clock a.m. of that 
date, to then and there show cause, if any they have, 
why a preliminary injunction should not be issued 
in favor of the plaintiff and against the defendants, 
and each of them, pending the hearing of this suit 
on the merits, which order shall enjoin and restrain 
said defendants, and each of them, during the 
pendency of this action, together with any members 
of their association, their agents, officers, representa- 
tives and employees, from directly or indirectly 
doing the matters and things as alleged in said com- 
plaint, a copy of which is served concurrently here- 
with, and particularly from soliciting and serving 
customers of plaintiff, persuading or inducing cus- 
tomers to break their contracts of service with the 
plaintiff, and from interfering with the business of 
plaintiff as established in Oregon, as in said com- 
plaint described, prior to August 1, 1947, or from 
violating their agreements, or aiding or abetting in 
the violation of those agreements, to refrain from 
competition for a period of three (3) [33] years 
after the cessation of employment, and, further, 
from the use of any of plaintiff's methods, equip- 
ment or products, or the information gleaned from 
their previous service with plaintiff in the service 
of defendants' customers; and 

It is further Ordered that a copy of this Order to 
Show Cause be served by the United States Marshal 
upon said defendants at the time of the service of 
the complaint herein, and that said copy of this 



vs. Charles P. Brewer, et al. 45 

Order be certified to by one of the attorneys of 
record herein. 

Done in open court at Portland, Oregon, this 24th 
day of October, 1947. 

CLAUDE McCOLLOCH, 
Judge. 

[Endorsed] : Filed October 24, 1947. [34] 



[Title of District Court and Cause.] 

ANSWER OF CHARLES P. BREWER TO 
INTERROGATORIES 

State of Oregon, 

County of Multnomah — ss. 

I, Charles P. Brewer, being first duly sworn, 
make the following answers to the interrogatories 
propounded in the above case: 

Answer to Interrogatory (a) 

(I) The contract of July 1, 1946, attached as 
Exhibit 1, is genuine but the contract was modified 
after the date thereof so as to provide that the net 
profits would be divided between the company and 
the agent on an equal basis. 

(II) I know of no such agreement between the 
plaintiff and any of the defendants. I believe the 
defendant Raymond Rightmire signed such an 



46 Paramount Pest Control Service 

agreement with a partnership between T. C. Sibert 
and G. H. Fisher, doing business as Paramount Pest 
Control Service. The certificate of partnership was 
filed on March 1, 1945 in Book 41, Page 293 of the 
Assumed Name Business Certificates of Multnomah 
County, Oregon. 

(Ill) The letter of resignation is genuine. 

Answer to Interrogatory (b) 

(I) I am serving customers or patrons for pest 
control service who were formerly served by plain- 
tiff for pest control and some of w T hom were under 
contract with plaintiff for [35] similar service. The 
other defendants are employed by me and as such 
employees serve customers or patrons for pest con- 
trol service who were served by the plaintiff for pest 
control and some of whom were under contract with 
plaintiff for similar service. The balance of the 
statement is untrue. 

(II) The statement is true. 

Answer to Interrogatory (c) 

A list of the customers and patrons is annexed to 
this answer and marked Exhibit A. 

/s/ CHARLES P. BREWER. 



vs. CJmrles P. Brewer, et al. 47 

EXHIBIT A 

Fischer Flouring Mills Portland 

Pacific Coast Fruit Co 

Oregon Flower Growers, Ass'n 

Sunshine Biscuit Co 

Sav-On-Drug Co 

Hi-Spot Cafe Camas, Wn. 

Home Town Bakery " 

Crown Willamette Inn " 

Albers Milling Co Portland 

Hawthorne Food Mkt 

Lairds Red & White 

Dizzy Whiz Cafe 

Hudson Duncan Cafe " & Branches 

39th. & Division Cafe 

Rowes Coffee Shop 

Flynns Fine Food 

Sellings Red & White Gresham 

Hickman Pharmacy _ Vancouver, Wn. 

Plaza Theatre Portland 

Ideal Dairy Portland 

Nite & Day Mkt - Vancouver, Wn. 

Columbia Food Stores Portland & Branches 

Zimmerman Feed Yamhill, Ore. 

Cozy Cafe Newberg 

Pacific Meat Co Portland 

Imlay & Sons Aloha 

Imlay Feed & Seed _ Reedville 

Perfection Bakery Hillsboro 

West Lynn Grocery _ West Lynn, Ore. 

Harolds Grocery Portland 

Harvest Milling Co 

Grand Ave. Cafe 

Dairy Co-op 

Lews Mkt Oregon City 

Safeway Stores, Inc Portland & Branches 

Swartz Transfer Portland 

Portland Provisioner 

Transportation Club 

Smith Grocery Hillsboro 

Whistlin ' Pig Cafe Portland 



48 



Paramownt Pest Control Service 



Rivieria Cafe Newberg 

Standard Market Oregon City 

Harold & Dans Cafe Portland 

House of Good Shepherd Portland 

Brookside Grocery Vancouver, Wn. 

Ralphs Cafe Cascade Locks 

Sunset Cafe Hood River 

Browns Farm Store Vancouver, Wn. 

Eds Feed & Seed ..Hood River 

Foodland Grocery Vancouver, Wn. 

Little Onion Cafe Hood River 

Hood River Cafe 

9th. St. Super Mkt The Dalles 

Cascade Baking Co " " 

Kerr Gifford & Co " 

McHales Grocery " " 

Hotel Dalles Coffee Shop " 

Star Theatre Goldendale, Wn. 

Grows Market 

Reliance Creamery 

Adams Market Arlington 

Central Mkt Heppner, Ore. 

Heppner Cafe 

Red & White Store 

Elkhorn Cafe 

Aikens Tavern 

Heppner Laundry 

Yarnell Tavern Lexington 

Lexington Cafe 

Farm Bureau Co-op Hermiston 

Purity Bakery Pendleton 

Pendleton Baking 

Pacific Fruit & Produce La Grande 

Inland Poultry & Feed 

Stein Club 

Portland Cafe 

7 up Bottling Co 

The Stockman 

Stein Coffee Shop 

Sacajuca Coffee Shop 

Royal Cafe 

McCord Grocery 



vs. Charles P. Brewer, et al. 49 

Union Bakery Union, Oregon 

Pacific Fruit & Produce. Baker, Oregon 

C. C. Anderson " 

The Provisioner " 

Stockmans Exchange " 

Stanfords Store Weiser, Idaho 

Washington Hotel " 

Idaho Candy Boise, Idaho 

Geiser Grand Hotel Baker, Oregon 

Harney Valley Bakery Burns 

Hudson Duncan Co Bend, Oregon 

Todds Bakery The Dalles 

Farmers Market " " 

Sigmans Food Stores Hermiston 

Jacksons Food Market Baker, Oregon 

Killgores Dairy Redmond 

Bond St. Food Market ..Bend 

Central Ore. Co-op. Creamery Redmond 

American Bakery Nampa, Idaho 

Electric Bakery " 

Hound Pup Cafe Cascade Locks 

The Dalles Meat Market The Dalles 

Lauderback Market White Salmon, Wn. 

Pinky 's Union St. Market The Dalles 

Bill Rivers La Grande 

Baker-LaGrande Groc. Co " 

Elks Club Baker 

Valley Dairy ' ' 

St. Charles Hospital Bend 

Nampa Whse. Grocery Nampa, Idaho 

City Market Burns, Oregon 

Goldendale City Dump Goldendale, Wn. 

Gem State Bakery Payette, Idaho 

Campas Market Corvallis 

Miles McKay Marcola, Oregon 



50 Paramount Pest Control Service 

Griggs Market Klamath Falls 

Cottage Bakery Cottage Grove, Oregon 

Cecils Cafe 

Burlingham-Meeker Amity, Oregon 

Tillamook- Amity Co-op " 

Smith Baking Co..— Salem 

Pacific Fruit & Produce Albany 

Kelleys Feed ' ' 

Smoke House Glendale 

Albany Feed & Seed Albany 

Albany Laundry ' ' 

Glendale Hotel Glendale 

Burlingham-Meeker Rickreal 

Burlingham-Meeker R.F.D Amity 

Glendale Club Glendale 

Pacific Fruit & Produce Corvallis 

Burlingham-Meeker Shedd 

Creech Thrift Store Glendale 

Henningers Market Roseburg 

Howard Jones Feed Hubbard 

P, W. Woolworth Medford 

Pacific Fruit & Produce " 

Aurora Whse. Inc Aurora 

Woodburn Feed & Seed Woodburn 

Barkus Feed Mill Salem 



vs. Charles P. Brewer, et al. 51 

State of Oregon, 

County of Multnomah — ss. 

I, Charles P. Brewer, being first duly sworn, de- 
pose and say that I have read over the above and 
foregoing answers to the interrogatories and know 
the contents thereof and that the answers made by 
me are true except that where any answers are made 
upon information or belief the same are true accord- 
ing to my best knowledge, information and belief. 

/s/ CHARLES P. BREWER. 

Subscribed and sworn to before me this 14th day 
of November, 1947. ; 

[Seal] E. F. BERNARD, 

Notary Public for Oregon. ; 
My Commission Expires 1/12/1941. 

Service of the foregoing Answer of Charles P. 
Brewer to Interrogatories is hereby accepted this 
14th day of November, 1947. 

/s ROBERT R. RANKIN, 

Of attorneys for Plaintiff. 

[Endorsed]: Piled November 15, 1947. [40] 



52 Paramount Pest Control Service 

[Title of District Court and Cause.] 

ANSWER OF ROSALIE BREWER 
TO INTERROGATORIES 

State of Oregon, 

County of Multnomah — ss. 

I, Rosalie Brewer, being first duly sworn, make 
the following answers to the interrogatories pro- 
pounded in the above ease: 

Answer to Interrogatory (a) 

(I) The contract of July 1, 1948, attached as 
Exhibit 1 is genuine, but the contract was modified 
after that date to provide that the net profits would 
be divided on an equal basis. 

(II) I never signed such an agreement, although 
I am informed that Ray Rightmire signed such an 
agreement with a partnership. 

(III) The letter of resignation is genuine. 

Answer to Interrogatory (b) 

(I) I am not soliciting or serving customers or 
patrons for pest control service who were formerly 
under contract with plaintiff for similar service or 
who were served by plaintiff for pest control. I 
have no knowledge as to what the other defendants 
are doing. 

(II) The statement is true. 



vs. Charles P. Brewer, et al. 53 

Answer to Interrogatory (c) 

(I) I have not served any customers, but I have 
seen [41] Exhibit A attached to the answers of 
Charles B. Brewer and I believe the list to be 
correct. 

/s/ ROSALIE BREWER. [42] 

State of Oregon, 

County of Multnomah — ss. 

I, Rosalie Brewer, being first duly sworn, depose 
and say that I have read over the above and fore- 
going answers to the interrogatories and know the 
contents thereof and that the answers made by me 
are true except that where any answers are made 
upon information or belief the same are true accord- 
ing to my best knowledge, information and belief. 
/s/ ROSALIE BREWER. 

Subscribed and sworn to before me this 14th day 
of November, 1947. 

[Seal] /s/ E. F. BERNARD, 

Notary Public for Oregon. 
My Commission Expires: 1/12/1951. 

Service of the foregoing Answer of Rosalie 
Brewer to Interrogatories is hereby accepted this 
14 day of November, 1947. 

/s/ ROBERT R. RANKIN, 

Of Attorneys for Plaintiff. 

[Endorsed] : Filed November 15, 1947. [43] 



54 Paramount Pest Control Service 

[Title of District Court and Cause.] 

ANSWER OF EARL MERRIOTT 
TO INTERROGATORIES 
State of Oregon, 
County of Multnomah, — ss. 

I, Earl Merriott, being first duly sworn, make the 
following answers to the interrogatories propounded 
in the above case : 

Answer to Interrogatory (a) 

(I) I never saw the contract of July 1, 1946, at- 
tached as Exhibit 1 before I read it in the complaint 
that was served on me in the case filed in the Circuit 
Court of Multnomah County, Oregon. I understand 
Mr. Brewer says the Exhibit 1 is a copy of the 
original and I have no reason to dispute that fact. 

(II) I never saw any such agreement and never 
signed any. 

(III) I never saw the letter of resignation and 
am not able to say whether the letter is genuine. 

Answer to Interrogatory (b) 

(I) I am employed by Charles P. Brewer and as 
such serve customers or patrons for pest control 
service who were formerly served by plaintiff for 
pest control. I formerly solicited customers who 
were served by plaintiff for pest control but have 
not done so since the 1st day of November, 1947. 

(II) The answer to the statement is true. 

Answer to Interrogatory (c) 
I have no list of the patrons and customers served 
but I have checked over Exhibit A attached to the 
answers of Charles P. Brewer and I believe the list 
to be correct. 

/s/ EARL MERRIOTT. [45] 



vs. Charles P. Brewer, et aJ. 55 

State of Oregon, 

County of Multnomah — ss. 

I, Earl Merriott, being first duly sworn, depose 
and say that I have read over the above and fore- 
going answers to the interrogatories and know the 
contents thereof and that the answers made by me 
are true except that where any answers are made 
upon information or belief the same are true accord- 
ing to my best knowledge, information and belief. 
/s/ EARL MERRIOTT. 

Subscribed and sworn to before me this 14th day 
of November, 1947. 

[Seal] E. P. BERNARD, 

Notary Public for Oregon. 
My Commission Expires : 1/12/1951. 

Service of the foregoing Answer of Earl Merriott 
to Interrogatories is hereby accepted this 14th day 
of November, 1947. 

/s/ ROBERT R. RANKIN, 

Of attorneys for Plaintiff. 

[Endorsed] : Filed November 15, 1947. [46] 



56 Paramount Pest Control Service 

[Title of District Court and Cause.] 

ANSWER OF RAYMOND RIGHTMIRE TO 
INTERROGATORIES 

State of Oregon, 

County of Multnomah — ss. 

I, Raymond Rightmire, being first duly sworn, 
make the following answers to the interrogatories 
propounded in the above case: 

Answer to Interrogatory (a) 

(I) I never saw the contract of July 1, 1946 at- 
tached as Exhibit I before I read it in the compliant 
that was served on me in the case filed in the Circuit 
Court of Multnomah County, Oregon. I understand 
Mr. Brewer says the Exhibit 1 is a copy of the orig- 
inal and I have no reason to dispute that fact. 

(II) I at one time signed such an agreement but 
not with the plaintiff. At the time I signed the 
agreement I was employed by a partnership. 

(III) I never saw the letter of resignation and 
am not able to say whether the letter is genuine. 

Answer to Interrogatory (b) 

(I) I am employed by Charles P. Brewer and 
as such serve customers or patrons for pest control 
service who were formerly served by plaintiff for 
pest control. I formerly solicited customers who 
were served by plaintiff for pest control but have 
not done so since the 1st day of November, 1947. 

(II) The answer to the statement is true. 



vs. Charles P. Bretver, et al. 57 

Answer to Interrogatory (c) 
I have no list of the patrons and customers served 
but I have checked over Exhibit A attached to the 
answers of Charles P. Brewer and I believe the list 
to be correct. 

/s/ RAYMOND RIGHTMIRE. 

State of Oregon, 

County of Multnomah — ss. 

I, Raymond Rightmire, being first duly sworn, de- 
pose and say that I have read over the above and 
forgoing answers to the interrogatories and know 
the contents thereof and that the answers made by 
me are true except that where any answers are 
made upon information or belief the same are true 
according to my best knowledge, information and 
belief. 

/s/ RAYMOND RIGHTMIRE. 

Subscribed and sworn to before me this 14th day 
of November, 1947. 

[Seal] E. P. BERNARD. 

Notary Public for Oregon. 

My Commission Expires 1-12-1951. 

Service of the foregoing Answer of Raymond 
Rightmire to Interrogatories is hereby accepted this 
14th day of November, 1947. 

/s/ ROBERT R. RANKIN, 

Of Attorneys for Plaintiff. 

[Endorsed] : Piled November 15, 1947. [49] 



58 Paramount Pest Control Service 

[Title of District Court and Cause.] 

AFFIDAVIT IN EESPONSE TO ORDER TO 
SHOW CAUSE 

State of Oregon, 

County of Multnomah — ss. 

I, Charles P. Brewer, being first duly sworn, de- 
pose and say: 

I im one of the defendants in the above entitled 
action and make this affidavit in response to the 
order to show cause issued in the action as to why a 
preliminary injunction should not be issued in 
favor of the plaintiff and against the defendant. 

I formerly resided in Oakland, California, and 
about March 1, 1946, I was employed by a partner- 
ship doing business under the name of Paramount 
Pest Control Service. The partners were T. C. 
Sibcit and G. W. Fisher, and this was the same 
partnership which filed an assumed name business 
certificate on March 1, 1945, in Book 41, Page 293, 
of the assumed name business certificates, of Mult- 
nomah County, Oregon. My duties with the part- 
nership were to solicit customers and service their 
places of business. I was at no time furnished with 
any formulas, processes or secrets. The partner 
bought poison from wholesalers which could be 
bought on the market by any person or business 
concern. I was paid a salary of $200.00 a month by 
the partnership. 

In April, 1946, I was sent by the partnership to 
take charge of the business in the state of Oregon 



vs. Charles P. Brewer, et al. 59 

and was promised a salary of $250.00 per month and 
expenses. I stopped at the [50] Roosevelt Hotel in 
Portland. H. W. Hilts, on behalf of the partner- 
ship, brought a quantity of poison and extermina- 
tion supplies to my room in the Roosevelt Hotel and 
left them there and immediately returned to Cali- 
fornia. No place of business was furnished me and 
inasmuch as a guest in a hotel could only remain for 
six days at that time, it was necessary for me to 
move the business and exterminator's supplies from 
hotel to hotel with me. I had been promised perma- 
nent employment on a salary by the partnership 
and relying on such representations, I sold my home 
in Oakland, California, and bought a home in Port- 
land, Oregon. 

About July 1, I was informed that a corporation 
was about to be formed in California, that, the busi-^ 
ness in Oregon was in the red, and it was necessary 
that "it be dumped," and that I would have to sign 
a contract with the corporation or my employment 
would be at an end. Accordingly, I signed the in- 
strument of which Exhibit 1 attached to the plain- 
tiff's complaint is a copy. It will be noted that the 
instrument does not bear the official designation of 
G. H. Fisher, who signed on behalf of the corpora- 
tion, and it is my information that at the time the 
instrument was signed, the corporation had not been 
organized. The corporation never qualified to do 
business in the state of Oregon until sometime in 
August, 1947. 

After the signing of the instrument, I devoted my 
best energies to building up a business but by Nov- 



60 Paramount Pest Control Service 

ember 1, I found that there could be no profit to me 
under the terms of the agreement. Accordingly, I 
drove with my wife to California and consulted 
with Mr. Sibert. I told him that it would be neces- 
sary for me to quit the business and he said that he 
wished me to stay, and he, at that time, agreed to a 
modification of the contract so that I would receive 
fifty per cent of the net profits. I returned to Port- 
land, and because of the modification agreed upon 
and not otherwise, continued in my [51] efforts to 
build up the business. 

About March 1, Mr. Hilts delivered to me a state- 
ment or purported statement of my account with 
the company from January 1, 1947, which was cast 
not on the basis that I was to receive fifty per cent 
of the net profits, but on the percentages set up in 
the written contract. I immediately told Mr. Hilts 
that if the agreement was not to be lived up to, I 
was through and he left for California, and on his 
return wrote me a letter saying that I was right 
about the modification and that I was to receive 
fifty per cent of the net profits. 

In June, 1947, Mr. Hilts came to Portland, and 
asked me to borrow money to pay to the company. I 
told him that T could not do so and shortly Mr. 
Sibert called me from Seattle about borrowing 
money to pay to the company and I told him the 
same thing. Mr. Sibert and Mr. Hilts both then 
came to Portland and went with me to the Bank of 
California. They explained to Mr. Ridehalch and 
told Mr. Ridehalch that I was the entire owner of 
the business in Portland and of all the supplies, 



vs. Charles P. Brewer, et al. 61 

equipment and so forth, and that the only interest 
they had was in some furniture, and that I was en- 
titled to borrow on the strength of a financial state- 
ment showing me the owner. I refused to borrow 
any money because Mr. Sibert had told me that he 
would never press me for money until the business 
in Oregon was on a paying basis. They then told me 
that beginning July 1, I would have to do business 
on the basis of the old written agreement and not 
on the basis of an equal division of the net earnings. 
I told them that it would be impossible for me to 
proceed on that basis, and I sent in my letter of 
resignation because of the violation and breach by 
the plaintiff of their agreement with me as modified. 

I have repeatedly requested that I be furnished 
an audit of my account based on an equal division 
of the net profits but I have never been furnished 
such an audit. The company [52] refused to furn- 
ish me the necessary equipment to carry on the busi- 
ness and it was necessary for me to purchase much 
of the equipment myself and out of my own funds. 

I have no property in my possession belonging to 
the plaintiff. All property belonging to the plaintiff 
was in a warehouse located at 15th and N. W. Mar- 
shall Streets, Portland, Oregon, and in the office at 
519 W. Park Street, Portland, Oregon. I told the 
warehouseman to deliver any of the property there 
to the plaintiff and the plaintiff has taken posses- 
sion of the office equipment. 

The plaintiff has in its possession equipment and 
supplies purchased by me and belonging to me to 



62 Paramount Pest Control Service 

the amount and value between $1,500.00 and 
$2,000.00. 

After my resignation I went into the pest control 
business in Oregon as Sibert and Fisher had 
breached their agreement made with me when I was 
sent to Oregon and as a result of which agreement, 
I sold my home in California and bought one in 
Portland, Oregon, and after the corporation was 
formed, it was my understanding that this same 
Sibert became President of the corporation. I was 
putting my time, money and energy in an attempt 
to build the business in Oregon and when it suited 
the purpose of the corporation, they repudiated 
their agreement with me to divide the net profits on 
an equal basis. 

I am serving many customers that were never 
serviced by the plaintiff and some of the customers 
who were formerly serviced by the plaintiff have 
sought my services as they were dissatisfied with 
the service rendered by the plaintiff. I did solicit 
some of the plaintiff's -customers but have ceased 
doing so and do not intend to solicit their customers 
in the future. 

Prior to August 1, 1947, the plaintiff was sending 
men as far as Boise, Idaho, to service customers. 
About [53] September 1, they abandoned this serv- 
ice and a number of the plaintiff's customers which 
I am servicing are in the district which the plain- 
tiff abandoned. 

It was definitely agreed between Mr. Sibert and 
me that the modification of the contract to the effect 



vs. Cliarles P. Brewer, et ai. 63 

that the net profits were to be divided equally be- 
tween the plaintiff and me would not be for a lim- 
ited period of time, but would continue for the 
duration of the contract. 

[Seal] CHARLES P. BREWER. 

Subscribed and sworn to before me this 15th day 
of November, 1947. 

E. P. BERNARD, 

Notary Public for Oregon. 
My Commission Expires 1-12-1951. 

Service accepted this 15th day of November, 1947. 
ROBERT R. RANKIN, 
Attorney for Plaintiff 

[Endorsed] Filed November 15, 1947. [54] 



[Title of District Court and Cause.] 

AFFIDAVIT COUNTER TO 
CHARLES P. BREWER'S AFFIDAVIT 

State of Oregon, 

County of Multnomah — ss. 

I, DeGray S. Brooks, being first duly sworn, de- 
pose and say : 

That I am manager of Paramount Pest Control 
Service, a corporation, located at Portland, Oregon, 
and have been such since the 15th day of August, 
1947, and consequently I am familiar with the cus- 
tomers who have cancelled their service with the 
plaintiff and with the accounts previously on its 
books. 



64 Paramount Pest Control Service 

That I have read the answers of Charles P. 
Brewer to the interrogatories herein and have 
analyzed the list of accounts which he has submitted, 
as they appear on the books of the plaintiff, and 
from his own statement I advise the Court that he 
lists some one hundred and forty-two accounts. 

But under his listing he makes such generalization 
as Safeway Stores, Inc., whereas this includes three 
warehouses and fifty-one stores which are not de- 
tailed in his listing, but which, through his associa- 
tion with the head of that department, he now serves 
in their entirety. He serves Hudson-Duncan, listed 
as three stores, whereas there are six, and Columbia 
Food Stores, listed as one, whereas there are nine 
stores served by him; so his actual acquisition of the 
business of Paramount is much greater than shown 
on his listing. 

To analyze further his statement, it appears he 
has taken one hundred and sixty-five accounts from 
Paramount Pest Control Service, leaving some forty 
of which we have no records. This does not neces- 
sarily mean that Paramount did not have these 
accounts before, because I personally instructed 
Charles P. Brewer to look after [55] Sigman's Pood 
Stores. The Sigman Pood Stores were under the 
plaintiff's service in Washington and I wrote Mr. 
Brewer to take care of them in Oregon several times 
and heard nothing further from him, but they now 
appear on his list attached to his Answer as stores 
he serviced and which should have been, if he had 
properly served the plaintiff, upon its list and served 
by plaintiff. 



vs. Charles P. Brewer, et al. 65 

That so far as the employees Rightmire and 
Duncan are concerned, while they may have signed 
the original agreements with the partnership, all of 
these contracts were sold and transferred to the 
corporation and were continued between the indi- 
vidual employee and the corporation thereafter, and 
the employees may never have known any change 
in management or obligation and continued as they 
had previously, but this they learned in the natural 
course of administration. 

In further answer to Charles P. Brewer's affi- 
davit, in response to the Order to Show Cause, he 
says that the customers formerly served by the 
plaintiff has sought his service because dissatisfied 
with that of the plaintiff (pages 4 and 5). He was 
familiar with Paramount and its service in this state 
during all of that period of time and if there was 
any dissatisfaction with plaintiff's service, it was 
due to Brewer's action as the franchised agent of 
plaintiff in this state. His statement that he does 
not intend to solicit plaintiff's customers in the 
future is because he has, through his action, prac- 
tically acquired many, if not all, and at least the 
most substantial of plaintiff's accounts, so his prom- 
ise to refrain from further solicitation is a nullity 
so far as the business of the plaintiff is concerned. 

Attached hereto is a list of plaintiff's accounts, 
with their contract number, name of the business 
and its location, which also appear in the defend- 
ant's claim of business, marked 4t Exhibit A" and 
incorporated in this affidavit to show the extent of 
the defendants' acquisition of plaintiff's business. 



66 Paramount Pest Control Service 

Further, deponent sayeth not. 

DeGRAY S. BROOKS. 

Subscribed and sworn to before me this 17th day 
of November, 1947. 

[Seal] ZELDA E. MILLER, 

Notary Public for Oregon. 
My Commission expires June 11, 1949. 

Service of the foregoing Counter affidavit by re- 
ceipt of a duly certified copy thereof, as required by 
law, is hereby accepted in Multnomah County, Ore- 
gon, on this 17th day of November, 1947. 
/s/ E. F. BERNARD, 

Attorney for Defendants. 

[Endorsed] : Filed November 17, 1947. [57] 



[Title of District Court and Cause.] 

PRELIMINARY MEMO 

Until there is disclosure in more detail of the 
secret nature of the processes, I do not feel that I 
should issue an injunction. An early pre-trial and 
trial date can be obtained through Clerk DeMott. 

Dated November 18, 1947. 

CLAUDE McCOLLOCH, 
Judge. 

[Endorsed] : Filed November 18, 1947. [58] 



vs. Charles P. Brewer, et al. 67 

[Title of District Court and Cause.] 

ORDER 

The above-entitled action coming on to be heard 
on the motion of the plaintiff for a temporary re- 
straining order and on the order to show cause why 
a preliminary injunction should not be issued, the 
plaintiff appearing by Robert R. Rankin and F. Leo 
Smith, of its attorneys, and the defendants Charles 
P. Brewer, Rosalie Brewer, Raymond Rightmire 
and Earl Merriott appearing by their attorneys, 
Plowden Stott and E. F. Bernard, 

It is Ordered by the court that the motion for a 
restraining order be and hereby is denied and that 
a preliminary injunction do not issue. 

Dated this 19th day of November, 1947. 
CLAUDE McCOLLOCH, 
District Judge. 

[Endorsed] : Filed November 19, 1947. [59] 



[Title of District Court and Cause.] 

ANSWER OF DEFENDANTS CHARLES P. 
BREWER, ROSALIE BREWER, RAY- 
MOND RIGHTMIRE and EARL MERRIOTT 

For their answer to the plaintiff's complaint the 
defendants Charles P. Brewer, Rosalie Brewer, 
Raymond Rightmire and Earl Merriott admit, deny 
and allege as follows : 



68 Paramount Pest Control Service 

First Defense 

1. The defendants admit Paragraph numbered I 
of the complaint except the defendants deny that 
they have performed any unlawful conduct. 

2. The defendants admit Subdivision (a) and 
(b) of Paragraph numbered II of the complaint 
save and except the defendants deny that the plain- 
tiff has been engaged in the business described in 
the State of Oregon. 

The defendants deny Subdivision (c) and (d) of 
Paragraph numbered II of the complaint. 

3. The defendants admit that the defendant 
Charles P. Brewer and the plaintiff signed an agree- 
ment of which Exhibit numbered One, attached to 
the plaintiff's complaint, is a copy. The defendants 
admit that thereafter the agreement was modified 
to provide so that Paragraph numbered 5 of the 
agreement would be eliminated and that in lieu 
thereof the plaintiff and the defendant Charles P. 
Brewer would each be entitled to one-half of the net 
profits from the business after payment of all ex- 
penses. The defendants further admit that the 
defendant [60] Charles P. Brewer on or about the 
6th day of February, 1947 paid the plaintiff the sum 
of $250.00; and on or about the 6th day of March, 
1947 the sura of $250.00; and on or about the 13th 
day of March, 1947 the sum of $494.25; and the sum 
of $259.61 on or about July 9, 1947. The defendants 
further admit that the plaintiff agreed to send a 
salesman and service man from its main office at 
Oakland, California to eastern Oregon to build up 



vs. Charles P. Brewer, et al. 69 

the business and that the plaintiff would pay the 
salaries and expenses thereof in the first instant, and 
that any profit or loss in expense in said venture 
would be shared equally between the plaintiff and 
the defendant Charles P. Brewer. 

The defendants further admit that the defendant 
Raymond Rightmire is a resident of and an in- 
habitant in the State of Oregon and that the defend- 
ant Rosalie Brewer is now and at all times mentioned 
was the wife of the defendant Charles P. Brewer 
and a resident of and an inhabitant in the State of 
Oregon and assisted Charles P. Brewer in his busi- 
ness. The defendants admit that the defendant Earl 
Merriott is now and at all times mentioned in the 
complaint has been a resident of and an inhabitant 
in the State of Oregon and was employed by the 
plaintiff through the defendant Charles P. Brewer. 

Save and except as herein expressly admitted, the 
defendants deny Paragraph numbered III of the 
complaint and the whole thereof. 

4. The defendants deny Paragraph numbered IV 
of the complaint and the whole thereof. 

5. The defendants deny Paragraph numbered V 
of the complaint and the whole thereof save and 
except the defendants admit that the defendant 
Charles P. Brewer signed the letter, a copy of which 
is set forth in Subdivision (1) of Paragraph V. 

6. The defendants deny Paragraphs numbered 
VI, VII and VIII of the complaint and the whole 
thereof. [61] 



70 Paramount Pest Control Service 

Second Defense 
About the month of November, 1946 the plaintiff 
and the defendant Charles P. Brewer agreed that 
the contract of which Exhibit One, attached to the 
plaintiff's complaint, is a copy should be changed 
and modified as of the date of the execution thereof 
and continuing for the full term of the contract to 
this effect, that Paragraph 5 of the contract should 
be eliminated and that in lieu thereof the plaintiff 
and the defendant Charles P. Brewer should each 
receive fifty per cent of the net profits of the opera- 
tion of the business after the payment of all expenses 
incidental to the operation of the business. The 
plaintiff and the defendant Charles P. Brewer from 
that time on continued to operate under the agree- 
ment as modified until about the month of July, 1947 
when the plaintiff notified the defendant Charles P. 
Brewer that it would no longer continue the per- 
formance of the contract as modified and that the 
defendant Charles P. Brewer would from that time 
on be required to pay to the plaintiff twenty per cent 
of the gross business done by the defendant Charles 
P. Brewer. For that reason and because of the 
plaintiff's repudiation by the plaintiff of the con- 
tract as modified, the defendant Charles P. Brewer 
wrote his notice of resignation as set forth in Para- 
graph numbered V of the complaint. 

Counter-Claim 
That when the employment of the defendant 
Charles P. Brewer was terminated, as set forth in 
the Second Defense of this answer, the defendant 



vs. Charles P. Brewer, et al. 71 

Charles P. Brewer turned over to the plaintiff sup- 
plies and equipment belonging to him used in con- 
nection with the business under the agreement of 
the plaintiff that it would pay him the reasonable 
value thereof together with all sums which might be 
due to the defendant Charles P. Brewer by reason 
of his performance of the contract as modified. [62] 
That there is due and owing to the defendant 
Charles P. Brewer from the plaintiff the sum of 
$700.00 by reason of his performance of the contract 
as modified and that the reasonable value of the 
supplies and equipment belonging to the defendant 
Charles P. Brewer turned over by him to the plain- 
tiff is in the sum of $1350.00. By reason thereof the 
plaintiff is indebted to the defendant Charles P. 
Brewer in the sum of $2050.00. 

Wherefore, the defendants pray that the plain- 
tiff's complaint be dismissed and that they have and 
recover from the plaintiff their costs and disburse- 
ments. And the defendant Charles P. Brewer prays 
that he have the judgment of $2050.00 against the 
plaintiff and for his costs and disbursements. 
PLOWDEN STOTT, 
E. F. BERNARD. 

Service of the foregoing Answer of Defendants 
Charles P. Brewer, Rosalie Brewer, Raymond 
Rigbtmire and Earl Merriott is hereby acknowl- 
edged this 21 day of November, 1947. 

/s/ ROBERT R. RANKIN, 

Of attorneys for Plaintiff. 

[Endorsed] : Filed November 24, 1947. [63] 



72 Paramount Pest Control Service 

[Title of District Court and Cause.] 

REPLY TO COUNTER-CLAIM 

For Reply to the Counter-claim of defendant, 
Charles P. Brewer, plaintiff alleges : 

Denies said counter-claim and each allegation and 
sum therein alleged; and alleges the plaintiff has 
either paid or given credit in its accounting as 
alleged in its complaint for any and all property or 
sums due from plaintiff to said defendant. 

Wherefore plaintiff prays for the relief as alleged 
in its complaint. 

KENNETH C. GILLIS, 
F. LEO SMITH, 
/s/ ROBERT R. RANKIN. 

United States of America, 
District of Oregon — ss. 

Due service of the foregoing reply is hereby ad- 
mitted in Portland, Oregon, this 24th day of Novem- 
ber, 1947. 

/s/ E. F. BERNARD, 

Of Attorneys for Defendants. 

[Endorsed] : Filed November 24, 1947. [64] 



vs. Charles P. Brewer, et al. 73 

In the District Court of the United States v ' 
for the District of Oregon 

Civil No. 3936 

PARAMOUNT PEST CONTROL SERVICE; a 

corporation, Plaintiff, 

VS. ' ! -' ] 

CHARLES P. BREWER, et al., 

Defendants. 

MEMORANDUM OPINION 

There are equities on both sides in this case, but 
it seems to me the controlling factor is the time ele- 
ment. If that question were presented singly, I 
would not think I should enjoin defendant generally 
from re-engaging in the pest control business; but, 
if this were August 1947, 1 might feel that defendant 
should be restrained from doing business with plain- 
tiff 's former customers, as customers' lists are pro- 
tected by the law. 

Considerable time has gone by and the interests 
of the 140 odd third parties who have continued 
service with the defendant have to be kept in mind. 
So an injunction will be denied. 

As to damages, I may need to hear the parties 
further, if they are not able to adjust their differ- 
ences. 

Dated January 30, 1948. 

CLAUDE McCOLLOCH, 
Judge. 

[Endorsed] : Piled January 30, 1948. [65] 



74 Paramount Pest Control Service 

[Title of District Court and Cause.] 

FINDINGS OF FACT AND 
CONCLUSIONS OF LAW 

'• Be It Remembered that the above-entitled action 
came; pn regularly for trial, the plaintiff appearing 
by its officers and Robert R. Rankin, F. Leo Smith, 
and Kenneth C. Gillis, its attorneys, and the defend- 
ants Charles P. Brewer, Rosalie Brewer, Raymond 
Rightmiie, and Earl Merriott (hereinafter referred 
to as the defendants) appearing in person and by 
Plowden Stott and E. F. Bernard, their attorneys. 
And the court having heard and considered the evi- 
dence and the arguments of counsel and having con- 
sidered the matter and being now fully advised 
makes the following 

FINDINGS OF FACT 

I. 

During the month of November, 1946 the plaintiff 
and the defendant Charles P. Brewer mutually 
agreed that Paragraph No. 5 of the Franchise 
Agreement between them — of which Exhibit 1 at- 
tached to the Complaint is a copy — [.QQJi should be 
altered and modified and it was at that time agreed 
that instead of the agent paying the company twenty 
per cent (20%) of the gross business done by the 
agent, the net profits of the business beginning as of 
the 1st day of July, 1946 and continuing throughout 
the term of the Franchise Agreement should be 
divided between the plaintiff and the defendant 
Charles P. Brewer on a 50-50 basis. 



vs. Charles P. Brewer, et al. 75 

II. 

The defendant Charles P. Brewer continued the 
business under the agreement as modified and about 
the 30th day of June, 1947 the plaintiff in violation 
of its agreement repudiated the contract as modi- 
fied and notified the defendant Charles P. Brewer 
that he would thereafter be required to pay the 
plaintiff twenty per cent (20%) of the gross busi- 
ness done by him. 

III. 

Because of the repudiation by the plaintiff of 
the contract as modified, the defendant Charles P. 
Brewer sent in his resignation as agent to be effec- 
tive August 1, 1947. 

IV. 

Since the 1st day of August, 1947, the defendant 
Charles P. Brewer has engaged in the pest control 
business and has solicited some of the customers of 
the plaintiff and has been servicing upwards of one 
hundred customers of the plaintiff. The issuance 
of an injunction would deprive such persons of unin- 
terrupted pest control service. The defendants Ray- 
mond Rightmire and Earl Merriott have been 
employed by the defendant Charles P. Brewer in 
his pest control business. [67] 

V. 

The plaintiff did not disclose to the defendant 
Charles P. Brewer or to any of the other defendants 
any receipts, formulae, or secret processes and at 
the defendant Charles P. Brewer has not used in 
his business any receipts, formulae or processes of 
the plaintiff. 



76 Paramount Pest Control Service 

VI. 

Tho franchise) r e ferr e d to in th e plaintiff's com - 
plaint, of which Exhibit 1 io a oopy> is not fair and 
yoaoonablOi 

Prom the foregoing Findings of Fact the court 
makes the following 

CONCLUSIONS OF LAW 
Damages & costs to neither party 

I. 

The plaintiff is not ontitlod to an injunction 
against tho defendants. 



A jiulgw*«Trlshould be entered against 
rrtho sum of $.. 



i Dated this 14th day of February, 1948. 

CLAUDE McCOLLOCH, 

United States District Judge. 

Service of the foregoing Findings of Fact and 
Conclusions of Law is accepted this 12th day of 
February, 1948. 

R. R. RANKIN, 
By G. E. BIRNIE, 

Of attorneys for Plaintiff. 

[Endorsed] : Filed February 14, 1948. [68] 



vs. Charles P. Brewer, et al. 77 

In the District Court of the United States 
for the District of Oregon 

No. Civ. 3936 

PAEAMOUNT PEST CONTROL SERVICE, a 
corporation, 



vs. 
CHARLES P. BREWER, et al, 

JUDGMENT 



Plaintiff, 



Defendants. 



Be It Remembered that the above-entitled cause 
came on regularly for trial, the plaintiff appearing 
by its officers and Robert R. Rankin, P. Leo Smith, 
and Kenneth C. Gillis, its attorneys, and the defend- 
ants Charles P. Brewer, Rosalie Brewer, Raymond 
Rightmire and Earl Merriott appearing in person 
and by Plowden Stott and E. F. Bernard, their at- 
torneys. And the court having heretofore signed 
Findings of Fact and Conclusions of Law, it is 

Ordered, Adjudged and Decreed that an injunc- 
tion against the defendants be and hereby is denied. 

It Is Further Ordered, Adjudged and Decreed 
that the Complaint be dismissed without costs. 

Dated this 14th day of February, 1948. 
CLAUDE McCOLLOCH, 

United States District Judge. 

[Endorsed] : Filed February 14, 1948. 
Entered in Docket February 14, 1948. [69] 



78 Paramount Pest Control Service 

[Title of District Court and Cause.] 

NOTICE OF APPEAL 

Notice is hereby given that Paramount Pest Con- 
trol-Service, a corporation, plaintiff above named, 
hereby appeals to the Circuit Court of Appeals for 
the Ninth Circuit, from the final judgment entered 
in this action on February 14, 1948, and the whole 
thereof. 

Dated this 12th day of March, 1948. 

KENNETH C. GILLIS, 
ROBERT R. RANKIN, 
Attorneys for Appellant, Paramount Pest Control 
Service, a Corporation. 

[Endorsed] : Filed March 12, 1948. [70] 



[Title of District Court and Cause.] 

POINTS ON WHICH APPELLANT INTENDS 

TO RELY. 

Appellant cites the following points on which it 
intends to rely for reversal of the judgment of the 
District Court of the United States for the District 
of Oregon, Honorable Claude McColloch, Judge, 
and claims said trial court Failed To : — 

1. Find the appellant was engaged in Oregon in 
the business described in its Complaint and denied 
in the Answer. 

Supporting Record : Complaint; Answer; Testi- 



vs. Charles P. Brewer, et al. 79 

mony of T. C. Sibert, E. W. Bushing, C. Wendell 
Fisher, DeGray Brooks; and Exhibits. 

2. Find all respondents had made and per- 
formed an unlawful conspiracy to (a) breach the 
valid written and subsisting contracts between ap- 
pellant and respondents Charles P. Brewer, Ray- 
mond Rightmire and customers of appellant and 
(b) to deprive appellant of its established business 
in Oregon. 

Supporting Record : Pleadings; Transcript of 
Testimony; exhibits and Respondents' Answers to 
Interrogatories. 

3. Enjoin, generally, respondents and their re- 
presentatives from continuing said conspiracy, in- 
cluding the interference with appellant's customers 
whether under contract or not ; Specifically Enjoin- 
ing Charles P. Brewer from violating his contract 
in connection with appellant's business and pre- 
venting him for a period of three years from 
August 1, 1947, from soliciting or serving appel- 
lant's customers; Specifically Enjoining respondent 
Raymond Rightmire for said period from working 
for any other pest control firm but appellant, and 
Issue both a temporrary and permanent injunction 
in the Court's orders of November 18, 1947 and 
February 14, 1948. 

Supporting Record: Pleadings, Answers to: In- 
terrogatories, Transcript of Testimony, Exhibits, 
Court's Memoranda of November 18, 1947 and Jan- 
uary 30, 1948. 



80 Paramount Pest Control Service 

: 4. Find there was undue and unpaid to appel- 
lant the following sums of money and entering 
judgment therefor, to wit: 

(a) Against respondent Charles P. Brewer, on 
agreements to pay for $6,155.84. 

Supporting Record: Exhibits 36, 39, 40, 40(a), 
50, 51, 51(a) and testimony of Harold Hilts, Plead- 
ings and Testimony. 

(b) Against all respondents, jointly and sever- 
ally, for damages, $6,796.95. 

, Supporting Record: Exhibits 53, 54, 55 ; Plead- 
ings and Testimony. 

5. Enter judgment for costs in favor of appel- 
lant. 

Supporting Record: Entire Record. 

•■ Dated this 16th day of March, 1948. 

/s/ KENNETH C. GILLIS, 
/s/ ROBERT R. RANKIN, 

Attorneys for Appellant. 

Service of the within Points on which Appellant 
intends to rely, by receipt of a duly certified copy 
thereof, is hereby accepted at Portland, Oregon, 
this 16th day of March, 1948. 

/s/ E. P. BERNARD, 

of Attorneys for Appellees. 

[Endorsed] : Filed March 17, 1948. [72] 



vs. Charles P. Brewer, et al. 81 

[Title of District Court and Cause.] 

ORDER DIRECTING TRANSMITTAL OF 
ORIGINAL EXHIBITS 

This matter came on for hearing on motion of 
the plaintiff for an order directing that the original 
exhibits be sent to the appellate court in lieu of 
copies; and 

It appearing to the Court that a Notice of Appeal 
and Bond has been filed herein and the Court being 
of the opinion that the Appellate Court shall have 
the original exhibits for inspection on such appeal; 

It is hereby Ordered that all the original exhibits 
offered or received in evidence in this court and the 
deposition of Chas. P. Brewer (McC) be sent to 
the Circuit Court of Appeals for the Ninth Circuit, 
in lieu of copies thereof, and that the sending of 
said originals shall in no way be construed to indi- 
cate which of said exhibits shall or shall not be 
printed in the Transcript of Record on appeal. 

Dated this 16th day of March, 1948. 

CLAUDE McCOLLOCH, 

Judge. 
OK E F Bernard. 

[Endorsed] : Filed March 17, 1948. [73] 



to THE BANK OF 



Ofe^ JUf - 

Portland, Oregon 



77 



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Q»rles Pu-grewex, 



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■ad eeemeti statement of my financial condition on... M&*. isfe. 



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which may 



ASSETS 



LIABILITIES 



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.her Assets (itemise below) 

pe rsonal Turui fur e 



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Notes Payable: 

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To Other Banks _ _ .._. 

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PROFIT AM) I(».S ACttJUNT 
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vs. Charles P. Brewer, et al. 85 

[Title of District Court and Cause.] ''■■' \ 

APPELLANT'S DESIGNATION OF RECORD 

Appellant designates the following matters to be 
contained in the " Transcript of Record": — ; 

Pleadings : Complaint, Order to Show Cause, 
Answers of Charles P. Brewer, Rosalie Brewer, 
Earl Merriott and Raymond Rightmire to Inter- 
rogatories, all dated November 15, 1947, Court's 
memorandum of November 18, 1947, Court's Order 
of November 19, 1947, Answer of defendants, Reply, 
Memorandum Opinion of January 30, 1948, Find- 
ings of Fact, Conclusions of Law, Judgment, Notice 
of Appeal, Designation of Record, Statement of 
Appellant's Points, Order transmitting original ex- 
hibits. 

Evidence : Transcript of Testimony, pages 1 to 
409, inch in question and answer form, deposition of 
Farries Flanagan, excluding exhibits, deposition of 
Charles P. Brewer taken January 7, 1948, Exhibits 
3, 5,(20), 7, 10, 11, 15, 28, 29, 31, 33, 35, 36, 38, 39, 
40, 40(b), 40(c), 46, 47, 48, 49, 50, 51, 51(a), 53, 
54, 55 (omitting Form 7 of contracts because of 
duplication with Exhibit 11), 56, 57 to 60, incl., 
60(a), 61, 61(a), 61(b), 62 (including title of case 
and Par. V, Sections (1) and (5) to end of para- 
graph, omitting the residue). 

ROBERT R. RANKIN, 

Of Attorneys for Plaintiff- 
Appellant. 

[Endorsed]: Filed March 17, 1948. [76] 



86 Paramount Pest Control Service 

[Title of District Court and Cause.] 

APPELLEE'S DESIGNATION OP ADDI^ 
TIONAL PORTIONS OF THE RECORD 

Appellees designate the following matters to be 
contained in the Transcript of Record: 

Affidavit of Charles P. Brewer in Response to 
Order to Show Cause ; 

Pre-Trial Order ; 
Defendants' Exhibit No. 77. 

/s/ E. F. BERNARD, 

Of Attorneys for Defendants- 
Appellees. 

PLOWDEN STOTT, 
COLLIER & BERNARD, 
WM. K. SHEPARD, 

Attorneys for Defendants- 

. i i ■ 

Appellees. 

Service of the foregoing Appellee's Designation 
of Additional Portions of the Record is acknowl- 
edged this 26th day of March. 1948. 
R. R. RANK1X. 
By G. E. BIRNIE, 

Of Attorneys for Plaintiff. 

[Endorsed] : Filed March 26, 1948. [77] 



v s. Charles P. Brewer, et al. 87 

[Title of District Court and Cause.] 

APPELLANT'S DESIGNATION OP 
ADDITIONAL RECORD 

Appellant designates the following matters to be 
contained in the Transcript of Record : 

Affidavit of T. C. Sibert, October 22, 1947, support- 
ing motion for restraining order ; affidavit of deGray 
S. Brooks answering affidavit of Charles P. Brewer, 
dated November 17, 1947. 

(Note : No pretrial order was ever signed by 
the Court.) 

Dated this 26th day of March, 1948. 

/s/ ROBERT R. RANKIN, 

Of Attorneys for Plaintiff- 
Appellant. 

Service of the foregoing "Appellant's Designation 
of Additional Record" by receipt of a duly certified 
copy thereof, is hereby accepted at Portland, Oregon, 
this 26th day of March, 1948. 

E. F. BERNARD M.E.S. 

Of Attorneys for Defendants- 
Appellees. 

[Endorsed] : Filed March 26, 1948. [78] 



88 Paramount Pest Control Service 

[Title of District Court and Cause.] 

DOCKET ENTRIES 
1947 

Oct. 24 — Filed Complaint. 

Oct. 24 — Issue summons — to Marshal. 

Oct. 24 — Filed motion for restraining order. 

Oct. 24 — Filed & entered order to show cause on 
Nov. 17, 1947 — 10 a.m. why preliminary 
injunction should not issue. McC. 

Oct. 30 — Filed summons with Marshal's return. 

Nov. 15 — Filed answer of Charles P. Brewer to in- 
terrogatories. 

Nov. 15 — Filed answer of Rosalie Brewer to inter- 
rogatories. 

Nov. 15 — Filed answer of Earl Merriott to interrog- 
atories. 

Nov. 15 — Filed answer of Raymond Rightmire to in- 
terrogatories. 

Nov. 15 — Filed affidavit of Charles P. Brewer re 
show cause order. 

Nov. 17 — Filed Return of service of writ. 

Nov. 17 — Filed affidavit counter to Charles P. Brew- 
ers affidavit. 

Nov. 17 — Record of hearing on order to show cause 
why preliminary injunction should not 
issue — argued & order taking under ad- 
visement & entered order allowing deft, to 
Nov. 24 to answer. McC. 

Nov. 18 — Filed preliminary memo. 



vs. Charles P. Brewer, et al. 89 

1947 

Nov. 19 — Filed & entered order denying motion for 
restraining order and preliminary injunc- 
tion. McC. Notices. 

Nov. 19 — Entered order setting for pre-trial confer- 
ence Nov. 24, 1947. McC. Notices. 

Nov. 24— Filed Answer of defts. C. P. & Rosalie 
Brewer — R. Rightmire & E. Merriott. 

Nov. 24 — Record of pre-trial conference. 

Nov. 26 — Entered order setting for further pre- 
trial conference on Dec. 26, 1947. McC. 

Nov. 24 — Filed reply to counterclaim. 

Nov. 29 — Entered order setting for trial on Jan. 20, 
1948—10 a.m. Notices. McC. 

Dec. 26 — Record of pre-trial hearing. McC. 

1948 
Jan. 6 — Issued subpoena & 15 copies to Atty. Gr. E. 

Bernie. 
Jan. 6 — Filed Notice to take Deposition of deft. 

Chas. P. Brewer. 
Jan. 7 — Filed notice of deft, to produce. 
Jan. 7 — Pre-trial order submitted to J. McC. 
Jan. 14 — Filed motion of defts. for inspection of 

documents. 
Jan. 14 — Filed Transcript of Proceedings Dec. 26, 

1947. 
Jan. 14 — Filed Deposition of Charles P. Brewer. 
Jan. 14 — Issued subpoena & 1 copy to Atty. Bernie. 
Jan. 14 — Filed Stipulation for deposition of Harry 

Flannagan. 
Jan. 15 — Filed answer to motion for inspection. 



90 Paramount Pest Control Service 

1948 

Jan. 15 — Piled & entered order denying motion for 
inspection. McC 

Jan. 19 — Filed Deposition of Farries Flanagan. 

Jan. 20 — Entered order that Kenneth C. Gillis be 
permitted to appear specially in this case, 
record of trial before court. McC. 

Jan. 21 — Record of trial before court resumed & 
cot'd to Jan. 23, 1948—10 a.m. McC. 

Jan. 23 — Record of trial before court resumed & 
order dismissing without prejudice as to 
deft. Carl Duncan on court's own motion. 
McC. 

Jan. 24 — Record of further trial before court — ar- 
gument — & order taking under advisement. 
McC. [79] 

Jan. 30 — Filed Memorandum Opinion. McC. Copies 
to attys. 

Feb. 11 — Lodged proposed Findings of ptff. 

Feb. 14 — Filed & entered Findings of Fact & Con- 
clusions of Law. McC. 

Feb. 14 — Filed & entered Judgment, denying in- 
junction & dismissing without cost. McC. 

Mar. 12 — Filed notice of appeal by plntf . 

Mar. 12 — Filed bond on appeal. 

Mar. 17 — Filed designation of contents of record. 

Mar. 17 — Filed points on which appellant will rely. 

Mar. 17 — Filed Vol. 1 & 2 transcript of proceedings, 
Jan. 20, 21, and 23, 1948, in duplicate. 

Mar. 17 — Filed motion for order directing transmit- 
tal of original exhibits. 



vs. Charles P. Brewer, et al. 91 

1948 

Mar. 17 — Filed and entered order directing trans- 
mittal of original exhibits McC. 

Mar. 22 — Filed Transcript of Proceedings Jan. 20, 
21, 23, 1948. 

Mar. 25 — Copies of notice of appeal to attorneys. 

Mar. 26 — Filed appellee's designation of additional 
portions of record. 

Mar. 26 — Filed appellant's designation of addi- 
tional record. 

United States of America, 
District of Oregon — ss. 

CERTIFICATE OF CLERK 
I, Lowell Mundorff, Clerk of the District Court 
of the United States for the District of Oregon, do 
hereby certify that the foregoing pages numbered 
from 1 to 81 inclusive constitute the transcript of 
record on appeal from a judgment of said Court in 
a cause therein numbered Civil 3936, in which Para- 
mount Pest Control Service, a corporation, is Plain- 
tiff and Appellant, and Charles P. Brewer et al, are 
defendants and Appellees; that the said transcript 
of contests has been prepared by me in accordance 
with the designations of contents of the record on 
appeal filed by the appellant and appellees, and in 
accordance with the rules of this court; that I 
have compared the foregoing transcript with the 
original record thereof and that it is a full, true 
and correct transcript of the record and proceedings 
had in said court in said cause, in accordance with 



92 Paramount Pest Control Service 

the said designations as the same appear of record 
and on file in my office and in my custody. 

I further certify that I have enclosed under sep- 
arate cover a duplicate transcript of the testimony 
taken and filed in this office in this cause, of pro- 
ceedings on January 20, 21, 23, 1948, together with 
exhibits Nos. 3, 5-20, 7, 10, 11, 15, 28, 29, 31, 33, 35, 
36, 38, 39, 40, 40-b, 40-c, 46, 47, 48, 49, 50, 51, 51-a, 
53, 54, 55 (omitting form 7 of contracts because of 
duplication with exhibit 11), 56, 57, 58, 59, 60, 60-a, 
61, 61-a, 62, filed in this office. 

I further certify that the cost of comparing and 
certifying the within transcript is $65.30 and the 
cost of filing the notice of appeal is $5.00, making a 
total of $70.30, and that the same has been paid by 
the appellant. 

In Testimony Whereof I have hereunto set my 
hand and affixed the seal of said Court in Portland, 
in said District, this 6th day of April, 1948. 
[Seal] LOWELL MUNDORFF, 

Clerk, 
By /s/ F. L. BUCK, 

Chief Deputy. [81] 



vs. Charles P. Brewer, et at. 93 

In the District Court of the United States 
for the District of Oregon 

Civil No. 3936 

PARAMOUNT PEST CONTROL SERVICE, 

a corporation, 

Plaintiff, 

vs. 

CHARLES P. BREWER, et al., 

Defendants. 
Portland, Oregon 
Tuesday, January 20, 1948, 10:00 o 'Clock A.M. 

Before: Honorable Claude McColloch, 
Judge. 

Appearances : 

Mr. R. R. Rankin and Mr. Leo Smith, Attorneys 
for Plaintiff; Mr. Kenneth C. Gillis (Oakland, Cali- 
fornia), of Counsel for Plaintiff. 

Mr. Earl A. Bernard and Mr. Plowden Stott, At- 
torneys for Defendants. 

Court Reporter : Ira G. Holcomb. [1] 

PROCEEDINGS OF TRIAL 

Mr. Rankin : We are ready to proceed on behalf 
of the plaintiff, your Honor. 

Mr. Bernard: The defendants are ready, your 
Honor. 

The Court: Proceed. Call a witness. 

Mr. Rankin: May I respectfully suggest to the 
Court that an opening statement would be of as- 
sistance, in order that you may have the matter in 
mind. 



94 Paramount Pest Control Service 

The Court: Yes. I have heard it discussed two 
or three times. 

Mr. Rankin: You do not care for an opening 
statement, then 1 ? 

The Court: Go ahead, if you want to make it. 

Mr. Rankin: The suit, your Honor, is against, 
primarily, Charles P. Brewer, based upon the lan- 
guage in the franchise, which is admitted, that he 
agreed not to, either as an employee, employer or 
otherwise, canvass, solicit or cater to any of the 
customers of the company which he may have known 
of because of his employment by the company, for 
a period of three years after the employment 
ceased. 

It is against three employees of the company, 
Duncan, Rightmire and Merriott. They are, in turn, 
divided into different classifications. Rightmire is 
one who signed a statement to the effect that he 
would not work for any other pest control firm for a 
period of three years after the termination of any 
employment with this company. [2*] 

Duncan has never been served. We have tried 
diligently to make service upon him and, so far as 
we know, he has never been in the jurisdiction since 
this action was brought. 

Merriott is a man who was hired by Mr. Brewer. 
Under Mr. Brewer's sales agency agreement, he was 
presumed to sign these men on contracts similar to 
that which Duncan and Rightmire signed, but Mr. 
Brewer, for purposes of his own, did not so sign 
Mr. Rightmire. 



* Page numbering appearing at top of page of Reporter's certified 
Transcript of Record. 



vs. Charles P. Brewer, et al. 95 

Rosalie Brewer is the wife of the defendant 
Charles P. Brewer. She never was in the employ of 
Paramount Pest Control Service but aided and as- 
sisted her husband when he was their agent here 
under the franchise agreement, and did also aid 
and assist her husband after the termination of this 
agreement. 

Both Merriott and Rosalie Brewer are charged 
as co-conspirators with the others because they 
knowingly and willfully entered into a conspiracy 
to break these contracts and aid and abet others in 
the violation of their agreements — knowingly, be- 
cause we will show in this case that these parties 
did flagrantly — and I mean by "flagrantly," upon 
their own volition — terminate their agreements and 
association with Paramount Pest Control Service as 
of August 1, 1947. 

Within a week thereafter a suit was brought in 
the State court by the plaintiff to enjoin them from 
that practice. The case was dismissed on the ground 
that there had not been a qualification of this for- 
eign corporation in Oregon so that it had the bene- 
fits of the courts. The merits of the case were not at 
that time gone into. Subsequently that qualification 
for entrance into this state was complied with, and 
then this suit was brought in this court charging 
these parties, all of them, with conspiracy, and par- 
ticularly from that complaint in the State court, all 
of these matters concerning these contracts were 
known to the defendants, therefore, who are the 
same as the defendants herein and who continued 
thereafter, until this complaint was brought, and 



96 Paramount Pest Control Service 

afterwards, to violate that contract and to aid and 
abet each other in that violation. 

When it comes to the damage part of the case, it 
is our position that, equity having taken jurisdiction 
of this case for the purpose of an injunction, dam- 
ages are likewise recoverable even in equity, and the 
gross amount of damages that are alleged in the com- 
plaint in the various items amount to $15,175. There 
will be much more to be said on the item of damages 
as we progress in the trial of the case. 

The testimony, your Honor, will be rather long 
and detailed because it involves, first, the history of 
the company. The defendants claim that we are not 
doing the business in Oregon that we say we are 
doing, and the only way to do that, as I see it, is to 
show what business we did do and then show what 
we are authorized to do, and then show what we did 
in Oregon, and to show this in some detail as to the 
composition of poisons and so forth. In fact, for 
my own convenience, I have divided [4] the services 
of this company in this insecticide control into three 
phases and I hope they will be of as much benefit to 
the Court as they have been to me. 

First is the detailed study of the poisons. That is 
necessary here because the defendants say that these 
are not unusual, that you can go on the common 
market and buy them. We distinctly remember this 
Court's statement that until something more defi- 
nite is shown concerning these formulas, no tempo- 
rary injunction would be granted. 

These poisons are divided into two classes, one of 
which is common — common because the laws of Cali- 



vs. Charles P. Brewer, et al. 97 

f ornia under which these people operate — and which 
the evidence will show is the most severe state in 
the Union on regulations — require that all poisons 
be registered and, so, these are registered, even 
though common poisons. 

These poisons are all put out under the brand 
and label of Paramount Pest Control Service. There 
is a lethal quality in practically all of them — there 
may be one exception. The composition of them is 
unique in that the evidence will show that if you use 
A, B, C and D and mix them in that order you get 
one result, whereas if you mix, say, A, C, D, B, you 
would get a different result. 

Next, after we get through with poisons, there 
is the study of the insects to which the poison is 
applicable, because some of these poisons penetrate 
the reproductive glands; others [5] kill anything 
that comes in contact only; so it requires, the evi- 
dence will show, a knowledge of the bug itself or the 
pest itself, a knowledge of its habits and so on. 

Then the third classification is that of the applica- 
tion, that is, to bring these two together, the poison 
and the pest. That is done by a long study of what 
is the most effective method of accomplishing this 
purpose what they will take and what they won't 
take. Some are sw T eet-loving insects and you have 
to have a basis of sugar or something of that nature. 
Others have different qualities, but I shall not go 
into the subject further than to state to the Court 
that this is not just an unusual or ordinary situa- 
tion. 



98 Paramount Pest Control Service 

For example, they make a rat poison. You can 
buy rat poison on the common market, but we will 
endeavor to show, and I think the evidence will 
show to the Court, that this rat poison has a differ- 
ent quality. 

Then this case involves an accounting, in order 
to show these items of damage. I will say to the 
Court that I have listed, on a little separate mem- 
orandum which is not an exhibit in the case, a sum- 
mary of all of the allegations of damage we are al- 
leging in the complaint, how much they amount to 
and what exhibits are offered in evidence to prove 
those. This I will give to the Court and to counsel 
simply as a convenience. It is not in evidence in the 
case but it may be used simply as a convenience to 
follow through. [6] 

The practice of this, your Honor, is to bring about 
a determination of whether these parties are entitled 
to continue their practices, if not enjoined and, if 
there is any right to compensation in a monetary 
form, to recover. 

A word about the parties so that the Court may 
know about whom we are talking at every stage of 
the case, from the very inception. The plaintiff is 
the Paramount Pest Control Service. It is a Cali- 
fornia corporation. It was incorporated in July, 
1947. 

Prior to that time, for several years, the Para- 
mount Pest Control Service was a partnership con- 
sisting of T. C. Sibert. Its Vice-President is Mr. 
Glenn Fisher. Its Secretary-Treasurer is the ac- 
countant in the tirm, Mr. Harold Hilts. 



vs. Charles P. Brewer, et al. 99 

The principal defendant is Mr. Charles P. Brewer. 
Mr. Brewer w r as at one time a very close and intimate 
friend of the Siberts. They had known each other 
for some time. Mr. Brewer came to Mr. Sibert and 
asked if there was not a place for him in this Para- 
mount Pest Control Service. He said he was inter- 
ested in coming to the Northwest. 

It so happens that very shortly after that, and be- 
fore Mr. Brewer's training — and, by the way, there 
is very diligent training given these employees, be- 
cause they are dealing with a lethal quantity and 
quality all the time. 

Before that training was completed entirely, this 
opening occurred here and he came up, first under 
the partnership [7] and then later under the corpo- 
ration. In a word, the evidence will show that there 
was every effort made by the plaintiff to aid and 
facilitate Mr. Brewer in the acquiring or mainte- 
nance and increasing of the business in this state. 

Rosalie Brewer, his wife, as I previously stated, 
not an employee of the company, assisted her hus- 
band, She was brought up here in May, 1947, and, 
under the direction of the Secretary-Treasurer of 
the corporation, put in charge of the books here for 
her husband so that she could know the system that 
would be approved by the principal, the Paramount 
Pest Control Service. She was office manager, 
signed checks of the Brewer Pest Control Service 
for her husband and aided and assisted him at all 
times, either before the breach, when he was under 
the agency agreement or after the breach when he 
went in for himself. In fact, we have reason to be- 



100 Paramount Pest Control Service 

lieye, I think the evidence will show, that she was 
probably the primary mover in this separation. 

The next is Carl Duncan, whom I will not dwell 
with except to say that we believe that he is or was 
a very trusted employee and a very efficient one. We 
have not been able to get service upon him but I do 
not understand that militates against showing that 
he is or was a member of the conspiracy. 

The next is Raymond Rightmire. He is a very 
good pest control man and had been trained in a 
manner that will be more accurately described later 
by the Paramount Pest Control Service. He saw fit 
to throw in his lot with Charles P. Brewer. [8] 

Earl Merriott was also an employee of Brewer. 
He was, in fact, never signed up on any contract. 

Now,. a word about the pest control business. Both 
of these parties are engaged in pest control. That 
will be clearly shown and it is not denied ; it is ad- 
mitted here. But there is a vast difference in the 
operation of these two businesses. 

In the first place, taking the time element, the 
evidence will show that the plaintiff, or those who 
comprise its corporation organization now, have 
been engaged in the business for ten years. There 
were times when they devoted as high as eighteen 
hours a day to the business, but they were not ex- 
perts and they had to learn by the practical method. 
They devoted a great deal of their money. They 
had to have jobs in which they earned their living, 
and then their pest control work was done nights 
after they had finished their regular jobs from 
which they could acquire funds to carry on, and as 



vs. Charles P. Brewer, et al. 101 

time went on, with even greater expenditures of 
money, they created this business. On the other 
hand, the defendant, the evidence will show, has not 
even yet had a year's experience in pest control, 
while the plaintiff has hired entomologists, gradu- 
ates of college, who have gone through the details 
of knowing all about bugs, knowing also about poi- 
sons. What Mr. Brewer and his associates have 
gotten has been primarily from the pest control 
training service conducted by plaintiff and, to a 
minor degree, from their own research and practical 
service in the field. [9] 

So far as knowledge of insects is concerned, plain- 
tiff, as I say, has these entomologists, while they 
have no employed entomologists in their concern. 
They had, from time to time, before this breach 
occurred, written to the main office as to problems 
relating to the classification of bugs and so on, but 
where they write now we don't know. I think it will 
be of assistance to the Court if I recite the events 
chronologically. 

In January Mr. Brewer made his application. In 
February he went to work, in training. He ceased 
that training April 6th and came to Oregon, his 
training being less than required because of the 
necessity of having someone in the District of 
Oregon. 

He worked under the partnership from April 6th 
to July 1, 1946, and in July they signed a contract, 
when the corporation was not yet formed, which 
contract was ratified after the corporation was 
formed. 



102 Paramount Pest Control Service 

That franchise — it is a contract, called a sales 
agent \s agreement, July 1, 1946. I think we will 
find ourselves, for the sake of brevity, repeatedly 
calling that a franchise, because that is the name 
that the parties applied to it. 

That franchise, however, went into effect and was 
lived up to until September 12, 1946. There is a 
dispute between the parties here, Mr. Brewer say- 
ing that it continued until November, about Thanks- 
giving in November. I think the evidence [10] will 
show the Court that it continued up to September 
12, 1946. Mr. Brewer stated that he could not do as 
if he had a different arrangement, not under the 
whole contract but only that one part, that of 
claimants. 

I think if the Court will bear with me for a little 
detail, it will help keep this evidence very much 
clearer in mind. Section 5 of the franchise agreement 
provides the agent shall take 80 per cent of the 
gross and the Paramount Pest Control 20 per cent. 
Out of the 80 per cent the agent pays the expenses 
of his operation. That is the franchise, as we shall 
term it, from time to time. 

The experience of the Paramount Pest Control 
Service shows that it takes about 60 per cent to 
operate this business, depending on the efficiency of 
the operator, so we figure that takes about 60 per 
cent out of the 80 per cent, leaving 20 per cent to 
the agent and 20 per cent to the company. 

After Mr. Brewer's protest of September 12, 
1946, that was changed by Mr. Sibert and Mr. 
Brewer alone, to this effect: Mr. Sibert, at Mr. 



vs. Charles P. Brewer, et at. 103 

Brewer's request, gave him permission to put all he 
wanted to into his business because that business 
was his, after it was created, and it was the under- 
standing that when he took a dollar home, that is, 
when Mr. Brewer took a dollar home he should pay 
an equal amount to the Paramount Pest Control 
Service ; and that the profits were divided on a fifty- 
fifty basis because, no matter how large or how 
small the profits w T ere, on [11] Mr. Brewer's busi- 
ness, that profit could have been plowed into the 
business to whatever extent Mr. Brewer determined 
was advisable, save for the obligation that when he 
took home a dollar he paid an equal amount to the 
company. 

Mr. Sibert omitted to mention that to Mr. Hilts 
and the matter went on until December when he 
happened to recall it and then told Mr. Hilts and 
his associates, and then received approval and rati- 
fication for what had been done. 

Under Mr. Brewer's statement, he claims he went 
down there in November and at that time this whole 
adjustment was made. The evidence, from our 
standpoint, will show quite the contrary ; that there 
was no business mentioned in November : that it was 
a vacation trip by Brewer; that he and his wife 
stayed at the Sibert home as guests of the Siberts 
and that the most friendly and pleasant relations 
existed. The only time any business was discussed 
was when Mr. Brewer went to the office of the com- 
pany to get some supplies. 



104 Paramount Pest Control Service 

This agreement that I have mentioned was to run 
to the first of the year only, that is, the dollar-home 
and dollar-company agreement was to run only to 
the first of the year, at which time it was presumed 
Mr. Brewer would have created sufficient capital 
that lie could then go on the franchise, and that was 
undoubtedly Mr. Brewer's conception because in 
February he made a payment on the franchise, and 
we have the check to show it. On March 6th he 
made a payment and w T e have the check to [12] 
show it. On the 13th of March he made a final pay- 
ment, the amount of that payment being consistent 
only with the amount that was then due under the 
franchise. 

u Then, intervening, between the dates of January 
1,. 1947, and March 13, 1947, Mr. Brewer complained 
that he should develop this Eastern Oregon terri- 
tory, where there were large distances to cover and 
little in between, no towns of any population, a very 
extensive territory. 

They made an agreement, which is entirely sep- 
arate. It is set out in the pleadings. It was en- 
tirety separate and made in order to develop the 
territory and help Mr. Brewer to accomplish sub- 
stantial promotion of this business. The Paramount 
Pest Control Service agreed to send two men to 
Portland or to Oregon and develop that territory, 
with a division of salaries and expense and profits 
and so forth. Only part of that is agreed to by the 
defendants. 

But, because that did not turn out to be profit- 



vs. Charles P. Brewer, et at. 105 

able — and this is the situation wherein we find our- 
selves very much in disagreement and, therefore, I 
mention it particularly to the Court. It was Para- 
mount's own idea that they voluntarily give to Mr. 
Brewer — and it w r as done without his request and 
even without his knowledge, after consultation of 
Sibert and Hilts — a continuation of the dollar-home, 
dollar-company basis, and Mr. Brewer was written 
to that effect by a letter which will appear in evi- 
dence. There were one or two meetings, but of no 
particular [13] consequence, as I recall it, until 
June. 

On June 1st, with Mr. Brewer, Mr. Sibert and 
Mr. Hilts present, they readjusted the whole trans- 
action covering the whole year. They canceled that 
provision about the franchise, gave him credit for 
what he had never paid, and continued to carry on. 

The principals seemed to be perfectly happy. In 
fact, Mr. Sibert bought the tickets, because it was 
Mr. Brewer's child's birthday — bought the tickets to 
Oakland, California, and they all w y ent down for a 
very pleasant and satisfactory visit. While they 
were visiting there, word came in that there had 
not been some collections made and it was suggested 
Mr. Brewer was not a good collector, and they re- 
tired to their room in some huff and nothing more 
was said. 

On the 24th of July, less than a month thereafter, 
Mr. Brewer wrote to Mr. Sibert his letter of resigna- 
tion in which he said he was terminating his agree- 
ment as of August 1st, that is, about a week later. 



106 Paramount Pest Control Service 

Under his contract his obligation was to at least give 
the company ninety days' notice. He paid no atten- 
tion to that. In fact, I think the evidence will show 
that Mr. Brewer's regard for the contract was 
something that might as well not have existed 
throughout this whole proceeding. 

Then, with remarkable facility, these defendants 
started to acquire the contact and patronage that 
they had acquired at one time for Paramount Pest 
Control Service. 

We have here the applications which are already 
in [14] evidence and admitted. We also have Mr. 
Brewer's own sworn reply, showing that from Au- 
gust 1, 1947, until the answer was made in Novem- 
ber, he had acquired 141 of the accounts, patrons 
and customers of the Paramount Pest Control Serv- 
ice, which was definitely in violation, obviously in 
violation of his agreement. 

That gives a running statement, I think, of all 
that is necessary to give the Court a general outline. 

Just a word as to these exhibits. Exhibit No. 45 is 
a photostatic copy of the mortgage from Mr. Brewer 
to the Bank of California, which has just been pro- 
cured. Opposing counsel has had a chance to observe 
it and reservation for it was made at the pre-trial. 

As to Exhibit 28, I feel I ought to explain to op- 
posing counsel that probably I made an error in 
connection with that. It is a bill of sale made by 
Sibert and Fisher, as a copartnership, to the Para- 
mount Pest Control Service. There were two or 
three copies of it made, and I have here a carbon 



vs. Charles P. Brewer, et al. 107 

copy that was fully signed by Mr. Sibert and Mr. 
Fisher. The copy that was entered in evidence had 
the notarial acknowledgment on it that this copy 
does not have, so when I put that in evidence I did 
not put the copy in evidence without the notarial 
certificate but I put the other in and it did not have 
Mr. Sibert 's signature. I asked Mr. Sibert to sign 
it and I thought afterwards that I should have de- 
layed that action on my part until after the Court 
had been advised and its permission secured, so I 
now formally call [15] attention of opposing coun- 
sel to that fact, and we can either strike Mr. Sibert ? s 
signature to that, if it is so desired, or we can intro- 
duce the one without the notarial acknowledgment, 
which does not add anything. I do not care what 
may be done, but I felt I should call it to the Court's 
attention. 

In conclusion, I thank the Court for its attention 
in giving me this opportunity. I hope it has been of 
some assistance. It has been rather sketchy, I fed 
myself, but we feel that we should be entitled to in- 
junctive relief. It seems to me there has been a 
complete violation of this agreement and we ask 
for such damages as the Court may find, from the 
evidence and these exhibits, that plaintiff is En- 
titled to. 

The Court : You have not discussed any law. 

Mr. Rankin: No. 

The Court : You just seem to take it for granted. 

Mr. Rankin: I am perfectly willing to discuss 
the law. In fact, that has been Mr. Smith's prin- 



108 Paramount Pest Control Service 

cipal duty. I didn't know that your Honor wanted 
it in an opening statement, but there are some cases 
in Oregon, particularly one case that, it seems to me, 
we could decide this case on alone. If we are going 
into any detailed discussion, I would like to have 
Mr. Smith cover that subject. He is familiar with 
it, having prepared the brief in the other trial. 

It is to this effect, that where we have a contract 
whereby one party agrees, under proper considera- 
tion, to do [16] nothing to interfere with another 
party's business, that, while they are in restraint of 
trade, it is a legitimate restraint of trade if any- 
where near reasonable, and three years is not un- 
reasonable, not an unreasonable time as the au- 
thorities show. Therefore, this conspiracy charge 
is based on the fact that where he employed Right- 
mire and where the agent Brewer agreed not to 
solicit or not to go into a compettive business for a 
period of three years that the Court will say that 
that is a proper provision. 

The Court: What is the Oregon case you say is 
the leading authority? 

Mr. Rankin : What is the case, Mr. Smith f 

The Court: What is the one you claim? 

Mr. Smith: 161 Or. 65. 

The Court: I will hear you, Mr. Bernard. 

Mr. Bernard: I do not care, your Honor, par- 
ticularly to repeat what I said in my opening state- 
ment at the pre-trial. Your Honor possibly will 
remember our position, that this contract was modi- 
fied and that modification was to continue through- 



vs. Charles P. Brewer, et al. 109 

out its term and then, suddenly, the plaintiff 
repudiated that modification, and it was for that 
reason that Mr. Brewer severed his connection with 
the company. 

Briefly, as to the law — and I am preparing a 
brief on the subject, not yet in shape to hand to your 
Honor, but I will hand it to your Honor as quickly 
as I can get it done. It [17] is our contention, first, 
that in a case of this kind the burden is on the 
plaintiff to show that the contract was fair, the 
restrictive covenants reasonable, and that they have 
a real relation to and are really necessary for the 
protection of the plaintiff. 

And, speaking of the fairness of this contract, 
taken in connection with the facts, this young man 
had been sent up here on a promise of a salary of 
$250 a month; he had sold his home in California 
and one month afterwards he was told he must sign 
this contract or else he was through. In the various 
provisions in the contract there is only one thing 
that the plaintiff promised to do, and that was to 
furnish such advertising as they might think neces- 
sary. We will have something to say later as to the 
reasonableness of the contract under the circum- 
stances. 

Further, we claim the law to be that it must 
appear that the plaintiff has performed all obliga- 
tions imposed on it by the contract before plaintiff 
is entitled to injunctive relief; further, that an in- 
junction will be denied when it appears that plain- 
tiff's conduct in obtaining the contract was unjust 



110 Paramount Pest Control Service 

or unfair or in plaintiff acts unjustly under the 
contract or if the contract is unjustly harsh, unfair 
or unreasonable or if the entire matter appears to 
be inequitable. 

We will contend, your Honor, that regardless of 
consideration, the conduct of this company towards 
this man when [18] they sent him up here, the cir- 
cumstances under which they obtained the contract, 
the nature of the contract itself and their repudia- 
tion of the modification of it would require this 
Court or at least give cause to this Court to deny 
any injunctive relief. 

The Court : What did the plaintiff furnish under 
the contract ? 

Miv Bernard: The plaintiff furnished nothing 
under the contract, your Honor. They furnished an 
opportunity to this young man to go into the pest 
control business. As we look at this contract, taking 
it by its four corners, they sent him up here and 
said, "You can go to work in the pest control 
business." 

The Court: Why couldn't 

Mr. Bernard: I know what your Honor has in 
mind. 

The Court: No, you don't. Why couldn't he 
have done it himself? 

Mr. Bernard: He could have done it himself. 
I think you mean, by the terms of the contract. 

The Court: Did they provide any financing? 

Mr. Bernard : Provided no financing. 

The Court: Provide materials and supplies? 



vs. Charles P. Brewer, et al. Ill 

Mr. Bernard: I think there were some supplies 
and materials to start in with, yes, although they 
were paid for. 

The Court: For which he paid? 

Mr. Bernard: For which he paid. They are 
charged against him. In other words, as I look on 
this contract, what they are [19] actually doing is 
to levy a 20 per cent tax on his gross business for 
the privilege of him going into the pest control 
business in Oregon. They furnished him really with 
nothing. 

The Court: Is it any different from any other 
concern, say, that wants to open up a new territory 
somewhere, where they say, "We want you to go up 
there and work for us and want you to agree that, 
if you quit us, you won't, within a period of three 
years, go in the same kind of business?" 

Mr. Bernard: There may be something for the 
Court to consider along the lines of public policy. 

The Court: Is it any different from what fre- 
quently happens in the commercial world where 
some concern says, "We are going to open up an 
agency in Los Angeles," for example, or take a case 
nearer home. Let's take a case here in Oregon and, 
as time goes on, they send men out to open up new 
territories. Is that the question here, whether a man 
could go out and open up a new territory and bind 
himself not to go into a competitive business? 

Mr. Bernard: That is the very question, your 
Honor, whether or not they could enforce a contract 
of that kind. 



.112 Paramount Pest Control Service 

The Court: Are contracts of that kind enfor- 
cible in equity? 

Mr. Bernard: I don't think so, no. In other 
words, I think plaintiff should have been required to 
furnish something except the mere opportunity to 
go out and go to work. 

The Court: Do you want to speak further, Mr. 
Rankin ? 

Mr. Rankin : No, your Honor. [20] 

The Court: All right. Proceed with the testi- 
mony. 

Mr. Smith: May it please the Court, I would 
like to submit to the Court a trial brief which has 
been prepared on the subject of contracts, the val- 
idity of agreements in restraint of trade, and so 
forth. At the same time I will give a copy to coun- 
sel for the defendants and at this time would also 
like to request that if the defendants have any cita- 
tions of authorities in support of their contentions 
that such a contract is unreasonable, we would ap- 
preciate it very much having those citations in 
ample time so that we may go to the Law Library 
and study the question in the intervening time and 
be able to make our arguments at the proper time. 

The Court : We have no jury here. Mr. Bernard 
said he would complete his memorandum as soon as 
he can. T imagine that will be some time during the 
day. 

Mr. Bernard: I do not want to deceive the 
Court. It may take me a day or two to get that 
memorandum in shape. I thought this, your Honor, 



vs. CJmrles P. Brewer, et al. 113 

it being a case before the Court, that even though 
I handed it up promptly at the end of the case they 
would have an opportunity to reply. 

The Court: Mr. Smith has just made a special 
request that if you have any authorities now he 
would like you to give them to him. 

Mr. Bernard: I will have to give them to him 
later. 

Mr. Rankin: If the Court please, I would like 
at this time [21] to move the admission, for the 
purpose of this case, of Mr. Kenneth C. Gillis, an 
attorney of Oakland, California, admitted to prac- 
tice in both the State and Federal Courts in the 
State of California. 

The Court: Is that satisfactory to you? 

Mr. Stott : Yes, your Honor. 

The Court: Very well. Proceed. 

THEODORE C. SIBERT 
was thereupon produced as a witness on behalf of 
plaintiff and, being first duly sworn, was examined 
and testified as follows: 

Direct Examination 
By Mr. Rankin: 

Q. What is your name, please? 

A. Theodore C. Sibert. 

Q. Where do you live, Mr. Sibert? 

A. 1139 Sunny Hills Road, Oakland, California. 

Q. What is your business? 

A. I am President of the Paramount Pest Con- 
trol Service. 



114 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. How long have you been in the pest control 
service ? 

A. I first started in 1927, not steady, but I have 
been pretty close to the pest control service for 
around twenty years. 

Q. When you say "not steady," what else did 
you do ? 

A. I am a cement finisher, a carpenter and a 
plasterer. I served an apprenticeship as car- 
penter [22] 

Q. Did you, while you were carrying! on these 
trades, also endeavor to do something in the nature 
of pest control ? 

A. I have been associated with pest control since 
1927, working part time. 

Q. Who was associated with you, if anyone? 

A. Mr. Watson T. Moore. 

Q. Anyone else? 

A. Working for the Western Exterminating 
Company. 

Q. Anyone else? 

A. Mr. Charles Brewer and many others. 

Q. Concerning your original enterprise,, was it 
a partnership or corporation? 

A. Co-partnership. 

Q. Who was your partner? 

A. Glenn H. Fisher. 

Q. How long were you and Mr. Fisher in part- 
nership ? 

A. November 15, in 1938, we started the Para- 
mount Pest Control Service. 



vs. Charles P. Brewer, et ah 115 

(Testimony of Theodore C. Sibert.) 

Q. To when? 

A. About July 1st, around July 1st or some- 
thing, 1946. 

Q. What did you do then? 

A. We formed a corporation. 

Q. Is that corporation the plaintiff in this case, 
the Paramount Pest Control Service? 

A. It is. [23] 

Q. When did you come to Oregon? 

A. Came to Oregon July 1, 1942. 

Q. How did you happen to come to Oregon ? 

A. Because of the request of the S. P. Railroad 
Company, handling their business in Oregon. 

Q. Had they been a previous client of yours in 
the State of California? A. Yes. 

Q. The Court has indicated he wants us to move 
along, so will you briefly give a summary or a brief 
sketch of the pest control business and how you 
built it up and what it amounts to at the present 
time? 

A. Well, Mr. Fisher and I started the Para- 
mount Pest Control Service November 15, 1938. He 
had been previously in business for two and a half 
years by himself. We didn't enough work to 
keep us both going, so I worked with my carpenter 
tools, my carpenter's trade, daytime, and he solicited 
on the street, and he done his work right at the 
office, and we done the work on a Sunday or when- 
ever we could. We worked pretty hard for years. 



116 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

We had a new idea. Our idea was this, to for- 
mulate the best of chemicals, that is, the best on 
the market. We had had quite a lot of experience 
in chemicals before and in servicing and applying 
them to pests or rats, or whatever we tried to kill. 

So, we decided not to sell the chemicals and to 
service these places, sign this work up, so much for 
the cleanup the first month and then so much each 
month thereafter, and this took in a wonderful way. 
We attained as near 100 per cent as we could in 
controlling of all disease-carrying pests pertaining 
to structural. We worked pretty hard. 

Q. What do you mean by saying you "worked 
pretty hard"? 

A. That is what I was about to tell you. We 
worked sixteen and twenty hours a day. There was 
many weeks I didn't take off my shoes, only to 
change my socks and wash my feet, and just lay 
down on the couch. 

Q. What ingredients did you use in your busi- 
ness? A. I don't understand the question. 

Q. What did you do with pest control? How 
did you control pests % How did you kill them ? 

A. Well, we have our own laboratories; we have 
research and we take chemicals and we formulate 
them applicable to a certain type of insect or that 
certain type of rodent, or whatever the problem 
might be. We train men. 

Q. Train them to do what, Mr. Sibert ? 

A. We train men along the lines of formulat- 
ing that is necessary, and how to apply that chem- 



vs. Charles P. Brewer, et al. 117 

(Testimony of Theodore C. Sibert.) 
ieal, that poison that we leave in there, foodstuffs 
especially, and to have the right amounts in the 
right containers ; and then train them to keep clean 
and so that they don't do things that they shouldn't 
on the job. It is quite extensive training. It is 
very unique. [25] 

Mr. Rankin: At this time, your Honor, the wit- 
ness having testified that they were incorporated, 
we would like to offer in evidence — and if we can 
keep these exhibits in the same order, giving them 
the same numbers, it will aid greatly in many 
respects. 

The Court: Why not put in all the exhibits at 
once? 

Mr. Rankin: That is all right with me, your 
Honor. Counsel has had them and has looked them 
over. Have you any objection to any of these 
exhibits ? 

Mr. Bernard: There are some exhibits in there 
that deal with some person's memoranda as to ac- 
counts. Of course, we object to those as being hear- 
say unless they are proved by some witness. 

Mr. Rankin: I think that objection would be 
proper, your Honor. If counsel will point them 
out 

The Court: No, w r e will do it like we do in all 
cases like this. All of the exhibits that have been 
marked for identification on both sides will be ad- 
mitted as exhibits in the trial, taking the same 
numbers and being subject to any objections that 



118 



Paramount Pest Control Service 



(Testimony of Theodore C. Sibert.) 

may heretofore have been made or may hereafter be 

stated. 

(The following Plaintiff's Exhibits were 

thereupon received in evidence and marked as 

follows:) [26] 



Plaintiff's 
Exhibit No 

1 
2 
3 
4 



5-1 

to 

5-26 
6-1 
to 
6-7 
7 



Description 

Articles of Incorporation of Paramount Pest Con- 
trol Service. 

Declaration of Purpose to Engage in Business in 
Oregon. 

Certificate of Authority to Engage in Business in 

the State of Oregon. 

Receipt for fees, Corporation Department, State of 

Oregon. 

Labels — Paramount Pest Control Service. 



► Instructions and Training Given Employees, Para- 
mount Pest Control Service. 

Rules and Regulations of Paramount Pest Control 
Service. 

8 Rules and Regulations of Paramount Pest Control 
Service. 

9 Rules and Regulations of Paramount Pest Control 
Service. 

10 Safety Rules in Using Compound 1080. 

11 Form of Service Order for Paramount Pest Control 
Service. 

12 Form in re service performed. 

13 Form of receipt — Paramount Pest Control Service. 

14 Duplicate copy of receipt. 

15 Application of Charles P. Brewer for Employment. 



vs. Charles P. Brewer ; et ah 119 

(Testimony of Theodore C. Sibert.) 
Plaintiff's 
Exhibit No. Description 

16 Employment Application Blank — Carl Robert Dun- 
can. 

16-A Form of Application — Paramount Pest Control 
Service. 

17 Form of Application for Registration of Economic 
Poisons — State of California. 

17-A Form, Application for Structural Pest Control 
Operator's License. 

18 Form of Application for Structural Pest Control 
Field Representative's License. 

19 Form of Application for Fidelity Insurance, The 
Fidelity & Casualty Company of New York. 

20 Copy of By-Laws for Internal Administration of 
Structural Pest Control Board. 

20-A Copy of By-Laws for Internal Administration — 
Structural Pest Control Board. 

21 Copy of By-Laws for Internal Administration of 
Structural Pest Control Board. 

21-A Copy of By-Laws for Internal Administration — 
Structural Pest Control Board. 

22 Time Reports — Carl Duncan. 

23 Time Reports — Raymond Rightmire. 

24 Copy of Publication ' ' Pest Control and Sanitation, ' ' 
September, 1947. 

25 Copy of publication issued by Julius Hyman & 
Company, Denver, Colorado, "OCTA-KLOR," May, 
1947. 

26 Copy of publication of Socony- Vacuum Oil Co., 
"Technical Bulletin," June, 1947. 

27 Sales Agent's Agreement with Paramount Pest Con- 
trol Service and Charles P. Brewer. 

28 Bill of Sale from co-partnership to corporation, 
Paramount Pest Control Service. 

29 Copy of letter March 15, 1947, H. W. Hilts to 
Charles Brewer. 



120 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 
Plaintiff's 
Exhibit No. Description 

30 Check dated February 6, 1947, $338.00, to Para- 
mount Pest Control Service. 

31 Supporting Voucher No. 181. 

32 Check dated March 6, 1947, $250.00, to Paramount 
Pest Control Service. 

33 Supporting Voucher No. 229. 

34 Check dated March 13, 1947, $494.25, to Paramount 
Pest Control Service. 

35 Supporting Voucher No. 244. 

36 Accounting as of June 30, 1947, between Hilts and 
Brewer. 

37 Check dated July 9, 1947, $259.61, to Paramount 
Pest Control Service. 

38 Supporting Voucher No. 413. 

39 Statement of Accounting on Franchise for July, 
1947. 

40 Tabulation in re Eastern Oregon Expense. 

40-A Indenture of Lease, The House of Celsi, Lessor, 
Paramount Pest Control Service by Charles P. 
Brewer, Lessee. 

40-B Sign entitled "To Our Patrons," Paramount Pest 
Control Service. 

40-C Sign "Patrons"— Brewer's Pest Control. 

42 Letter, July 24, 1947, Charles P. Brewer to T. C. 
Sibert. 

43 Check dated March 3, 1947, $226.00, to Kelly Motors. 

44 Supporting Voucher No. 203. 

45 Photostatic copy . of Chattel Mortgage executed by 
Charles P. Brewer, $1,052.63, to Bank of California 
N.A. 

46 Photostatic copy of Assumed Business Name Cer- 
tificate, Brewer Pest Control. 

47 Photostatic copy of Certificate of Retirement, Brew- 
er 's Pest Control. 



vs. CJiarles P. Brewer, et al. 121 

(Testimony of Theodore C. Sibert.) 
Plaintiff's 
Exhibit No. Description 

48 Photostatic copy of Assumed Business Name Cer- 
tificate, Brewer's Pest Control. 

49 Statement of Accounting on Franchise for January 
and February, 1947. 

50 Statement of Assets taken over by Charles P. 
Brewer. 

51 List of Accounts totaling $925.89. 

51-A Statement entitled ''Eastern Oregon State Run" — 
Total Revenue, $1357.00. 

53 State of Expense, $3596.95. 

54 File of "Canceled Accounts with Time to Run as 
Per Contract. 

55 File of "List of Accounts on Books" Longer than 
one year and canceled because of Brewer action. 

56 Copy of letter dated October 22, 1947, Attorneys for 
Paramount Pest Control Service to Charles P. 
Brewer. 

57 Profit & Loss Statement, January 1 through Febru- 
ary 28, 1947. 

58 Profit & Loss Statement, January 1 through March 
31, 1947. 

58-A Profit & Loss Statement, January 1 through March 
31, 1947. 

59 Balance Statement, January 1 through April 30, 
1947. 

59-A Portland Profit & Loss Statement, January 1 through 
April 30, 1947. 

60 Profit & Loss Statement, January 1 through May 
31, 1947. 

60-A Balance Statement, May 31, 1947. 

61 Balance Statement, June 30, 1947. 

61-A Profit and Loss Statement, January 1 to June 30, 
1947. 



122 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 
Plaintiff's 
Exhibit No. Description 

61-B Trial Balance, June 30, 1947. 

62 Copy of Complaint in Circuit Court of the State of 
Oregon, Paramount Pest Control Service v. Charles 
P. Brewer, et al. 

63 Copy of Notice to Produce in Cause No. 178013, 
Circuit Court of the State of Oregon. 

64 Check dated September 10, 1947, payable to Conger 
Printing Co., signed "Brewer's Pest Control." 

65 Check dated October 17, 1947, payable to Conger 
Printing Co., signed "Brewer's Pest Control." 

66 Check dated October 10, 1947, payable to Conger 
Printing Co., signed "Brewer's Pest Control." 

67 Form of Receipt — Brewer's Pest Control. 

68 Form to be signed by customer — Brewer's Pest 
Control. 

69 Business Card, Brewer's Pest Control. 

70 Form of Service Order — Brewer's Pest Control. 

71 Form of Daily Report — Brewer's Pest Control. 

72 Form of Statement — Brewer's Pest Control. 

73 Envelope bearing return address "Brewer's Pest 
Control" (small size). 

74 Envelope (large size) bearing return address "Brew- 
er's Pest Control." 

75 Letterhead — Brewer's Pest Control. 

Mr. Rankin: Your Honor, the first exhibits re- 
lating to the corporation, I anticipate there is no 
objection to them. 

The Court: They are all in. 

Q. ( By Mr. Rankin) : Mr. Sibert, I would like 
to hand to you Plaintiff's Exhibit No. 5, sub-num- 
bered No. 5-1 to No. 5-26, and ask you to state, after 



vs. Charles P. Brewer, et al. 123 

(Testimony of Theodore C. Sibert.) 
having reviewed those, whether they are poisons that 
are put out by your company, labels of poisons put 
out by your company ? 

The Court : You know T what they are. You have 
seen them. Are they covering your material? 

A. Yes. 

Q. (By Mr. Rankin) : Are they poisons put out 
by your company? A. They are, sir. 

Q. Are all of these poisons such as you can buy 
on the common market? A. No, sir. 

Q. How many are there altogether? Twenty- 
six? A. Twenty-six here, sir. [33] 

Q. What proportion of those can you buy on the 
common market, not under your name but which 
are common poisons that you can buy ? 

A. What proportion of these chemicals? 

Q. What proportion of these poisons represented 
by these labels can you buy on the common market ? 

A. These chemicals are not for sale. They are 
for use in the service department. 

Q. If they contain poisons that are not unique 
in your business but are common on the market, 
how many of those are covered by these labels? 

A. There is thirty-one poisons which we have 
registered — there is five that is basic poisons which 
we have to register. 

Q. You say you have to register. Just what do 
you mean by that? 

A. Because of the strict laws, the Economic Poi- 
sons License of California. It is a package law, 



J 24 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 
sir, and it is the Economic Poisons Law — As long 
as you are a reliable company and have chemists 
and the equipment to formulate these poisons and 
to package them and put your label on and the cor- 
rect amount of the compound, the amounts in the 
poisons, the exact amount to the gram of the poi- 
sons and the exact amount to the gram of the inert 
ingredients. 

Q. You say there are five basic poisons ? 

A. Five basic poisons, yes. There are thirty-one 
poisons that we have registered. [34] 

Q. You said that. A. Yes. 

Q. Five of them are basic? 
. A. There are chemicals that you buy that are not 
basic, what are common poisons, because you can 
buy those on the market. 

Q. As to the other twenty-six you describe, is 
there anything done by your company in connection 
with those ? A. Yes. 

Q. Is what you do unique or different from those 
that you get on the common market? 

A. It is, sir. 

Q. Have you any man in your employ who, as a 
part of his duty, has anything to do in connection 
with these poisons? A. I have Mr. Bushing. 

Q. What is his department in your company? 

A. He is an entomologist and chemist, a teacher 
to teach the men, our men, how to handle poisons, 
especially how to handle poisons safely. 

. Q. Does your business require any knowledge as 
to the pests? A. It does, sir. 



vs. Charles P. Brewer, et cd. 125 

(Testimony of Theodore C. Sibert.) 

Q. What knowledge do you have to have in order 
to handle pests ? 

A. You have to have quite a lot of knowledge 
because it is like this : One insect, it takes one poison 
to kill that one insect; and some poisons will not 
apply to that insect, and you have to know how to 
identify that insect, so, therefore, we have a [35] 
school and have an entomologist, and that is the 
service that you get — something that the boys on the 
road don't have. He is always there. They send 
insect specimens in to him and they are correctly 
identified and the exact formulation is prescribed, 
just what and how much to use to take care of the 
insect. 

Q. Suppose you gave too much poison, would 
that still kill the insect ? ; ; 

A. Certain poisons does not kill if you give. too 
much. 

Q. To what do you refer, generally ? 

A. Well, arsenic — too much arsenic will hot 'kil'l. 
There are certain poisons in here that are repulsive, 
that a person could not take— it is repulsive. 

Q. Do you know of any other pest control service 
that has a branch instructing its men? : 

A. Not on the Coast, sir. " <" ; ' 

Q. Do you require your employees to have ^any 
training'? 

A. We have to train all employees because of the 
safety, because in California there is a very strict 
law. We have the Structural Pest Control Board 



126 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 
in California, and everybody that works in this in- 
dustry in California must pass a written examina- 
tion under the Board, and it makes a profession out 
of this business. 

Q. In what states do you do business? 

A. Do business in California, Oregon and Wash- 
ington and Arizona. 

Q. The law of which state or states do you find 
the most exacting ? [36] 

A. California. 

Q, Have you complied with all the laws of Cali- 
fornia in respect to your business ? A. Yes. 

Q. Do you, as a matter of fact, thereby also con- 
form to the requirements of the other states ? 

A. We run our business according to the laws of 
California. 

Q. Will you look at the set of exhibits that you 
have before you? A. Yes. 

Q. Explain to the Court how those various in- 
struments are used in connection with your business? 

A, Exhibit 6? 

Q. Just a moment, Mr. Sibert. The exhibit 
starts with No. 6-1. 

A. I have it now, sir. This is literature that is 
got out by Mr. Bushing. 

Q. What it is, please? Just explain how it fits 
in with your training of your employees ? 

A. We set these boys right on the correct iden- 
tification of all pests and those especially what we 
have the most of, and we formulate the information 



vs. CJmrles P. Braver, et al. 127 

(Testimony of Theodore C. Sibert.) 
to give to all the men to study so that they can be 
better men and can identify these pests and insects 
which they have to work with at all times. 

Q. Take Exhibit 6-1. What is that ? How does 
that bear on this matter? A. This is bedbugs. 

Q. What about it? 

A. Well, it explains the type of injury that 
would result from the bite of a bedbug and what 
diseases it carries when it bites. 

Q. What do you do with that pamphlet that gives 
that information? 

A. We mimeograph these off and give them to 
all men that works for us. 

Q. Take No. 6-2, "White-Footed Mice." 

A. This is instruction on a very uncommon 
mouse and information that the boys should need. 
It gives identification and gives all measures to 
handle this certain type of mouse. 

Q. You mean, to identify the mouse so that it 
can be killed? A. That is right. 

Q. Take No. 6-3. 

A. Clothes moths, the importance and type of 
injury, food of the moth, and giving the chemicals 
that should be used and the type of inert ingredients, 
history and habits, and then control measures, and 
we explain exactly what should be done. 

Q. What do you mean by "inert ingredients' 7 ? 

A. Inert ingredients is to carry all the poisons, 
to formulate certain poisons together so that they 
will be compounded to give a certain type of poison 



128 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

that will do a certain job, to take care of that certain 

type of rodent or that certain type of insect. 

Q. Are inert ingredients themselves poisons, 
necessarily ? A. Not necessarily. 

Q. When your labels mention active and inert 
ingredients, what [38] are the active ingredients, 
generally speaking? 

A. They are the poisons that is found. These 
poisons, every one of them, is inspected once a year 
by the Economic Poisons License Department. They 
come right out to the boys on the job and they take 
take them out of the can. These poisons must be 
labeled. They take a certain portion of a certain 
specimen once a year to see that these poisons are 
exactly as on the label. 

Q. Do you have to show the content of all these 
poisons on the labels? A. We do. 

Q. Do you have to show what the inert ingredi- 
ents are? A. No. 

Q. How do you find out what inert ingredient 
to use ? 

A. We have to experiment as to what inert in- 
gredients to use. 

Q. These articles or papers you are mentioning 
here, under this Exhibit 6-1 to 6-7, are they given to 
the employees for their instruction and use and 
training, such as you have already stated ? 

A. They are, sir. 

Q. Take Exhibit No. 6-4, " Carpet Beetles or 
Buffalo Beetles. " 



vs. Charles P. Brewer, et al. 129 

(Testimony of Theodore C. Sibert.) 

A. It has to do with the importance and type of 
injury. If you were not trained, you would n 't know 
the difference between clothes moths and these. It 
is entirely different. They have an entirely different 
chemical, an entirely different application to take 
care of them. This explains the food and distribu- 
tion, and how they [39] come and where they are 
found. They are found different places, and they 
hibernate. This shows the life history, appearance 
and habits, and of course the control measures, how 
to take care of them and what chemicals to use. : 

Q. Take Exhibit 6-5. A. Yes. 

Q. What is that? 

A. That is what we call the "Bug House Ques- 
tionnaire." 

Q. Does that apply to the bug itself or what? 

A. This applies to the man after he is taught 
and goes to school. He is sent this "Bug House 
Questionnaire ' ' containing true and false questions 
to see and get his IQ to see what he is getting out of 
his studies. 

Q. Suppose he does not answer the questions 
properly ? 

A. Then we go to his superior, whoever he is 
working for, and see what is wrong. 

Q. Suppose he answers them excellently, what 
happens then? 

A. Then that is in his favor. 

Q. What happens? Does he get any work be- 
cause of that ? 



130 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

A. We don't have priorities. It is the man that 
knows how to do the job and knows exactly what is 
best for his job, he goes forward best. 

Q. What about Exhibit 6-6 ? 

A. That is another "Bug House Questionnaire" 
covering rats and mice, bedbugs, silverfish and fleas, 
carpet beetles, moths and [40] ants. 

Q. Silverfish, what is that? 

A. Silverfish is an insect. 

Q. Is that of the same nature of a questionnaire 
as we just got through with ? 

A. This is the same nature of a questionnaire. 

Q. Take Exhibit 7. A. 6-7? 

Q. Yes. What is 6-7? 

A. This is a report of sodium fluoroacetate bait- 
ing. This poison is very dangerous itself, so danger- 
ous itsel f that there is no known antidote. It is very 
hard to get. No company can buy it without they 
are an established company. These are poisons that 
whenever a man uses them in training, or otherwise, 
he has to fill out one of these reports as to where he 
puts his bait, and then keep a complete account of 
that bait, of that poison. 

Q. You say you can't buy it, that not everyone 
can buy that? 

A. The company that makes this certain chemi- 
cal insists that you are an established company and 
have quite a large liability insurance. They don't 
undertake the liability themselves. 

Q. When you say "quite large," what do you 
mean by that ? A. At least 40 and 80. 



vs. Charles P. Brewer, et al. 131 

(Testimony of Theodore C. Sibert.) 

Q. What do you mean'? 

A. If one person gets injured, $40,000; if there 
is a bunch of [41] them, they divide the $80,000. 

Q. You have to furnish a bond before you can 
buy it? 

A. There is a bond that you have to have. 

Q. Are there many companies that manufacture 
that kind of poison? 

A. There is only one company that manufac- 
turers this poison. 

Q. Why ? Is their supply abundant or not ? 

A. Very limited. 

Q. Take a concern that was just starting in, 
perfectly new, could they go out and purchase it ? 

A. Well, they would have to furnish their bond. 
I don't know, but it would be very hard if they did. 

Q. Take Exhibit No. 7. 

A. That is Rules and Regulations of the Para- 
mount Pest Control Service. When a man comes 
to work for us, we talk to him quite a while and we 
hand him the Rules and Regulations to read. This 
has to do with how to keep clean and how to handle 
your kits and how to protect themselves. A man 
must understand he has to be careful, and he has 
to use the things we furnish him. 

Q. Is that signed? A. It is signed. 

Q. It is signed by whom ? 

A. Signed by Rightmire, Raymond L. Right- 
mire. 



132 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. Look at Exhibit No. 8, please. 

A. This is another copy of Bales and Regula- 
tions. 

Q. Is that signed? [42] A. Yes. 

Q. Whom is that signed by? 

A. Carl Duncan. 

Q. Look at Exhibit No. 9. 

A, That is another copy of Rules and Regula- 
tions. 

Q. How does it relate to the others ? 

A. Every once in a while we have to change 
these; change them a little bit. This is a new one. 

Q. Look at Exhibit No. 10. 

A. Safety Rules in Using Compound 1080. 

Q. What is Compound 1080? 

iV- Sodium fluoroacetate. 

Q. Is it dangerous or not? 

A. Very dangerous. These are the safety rules 
in using it. It tells just exactly what it is, where it 
comes from, the lethal dose. No employees are 
allowed — they are not even allowed to dilute it. We 
do not allow them to handle it. It is told here just 
exactly what they have to do. 

Q. Do you have rules relating to the service of 
the employees and how they should serve your com- 
pany for their own protection and for sanitation and 
so forth? A. We do. 

Q. See if Exhibit No. 11 has any bearing on this ? 

A. Exhibit No. 11 is the general service order, or 
our contract. 



vs. Charles P. Brewer, et al. 133 

(Testimony of Theodore C. Sibert.) 

Q. That is Form 7, I believe. How do you 
handle that ? [43] A. Form 7. This is Form 7. 

Q. Well, I don't care about the form number." It 
is Exhibit 11 and it is called "Service Order." 

A. Yes. 

Q. How do you handle that ? Just explain to the 
Court what function it has in your business? 

A. This is a general service order which it takes 
a licensed man in the State of California to carry. 
California does not allow you to identify pests with- 
out you have a license in that state to do that job: l 

Q. Did Mr. Brewer have any license in Cali- 
fornia? A. He did not. ' '■■ 

Q. Go ahead. 

A. This is for general pest control. It has the 
name and address, the service, the type of property' 
and the order number, the time of starting and who 
you see, and it has most of the pests that we have 
in general, and the date and price and conditions, 
and the length of the contract. 

Q. When do you get that ? 

A. We get this before we start to work on 
the job. 

Q. Whom is it signed by ? 

A. It is signed by an official salesman or usually 
the branch manager in the district. 

Q. Anyone else ? 

A. It is also signed by the customer. [44] 

Q. Is that a contract between you and the cus- 
tomer, is that what you mean? A. It is, sir. 



134 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. Exhibit No. 11 is what? 

A. It is a service order. 

Q. What is the next exhibit? 

A. It gives 

Q. Pardon? 

A. It gives the name, address, remarks, and 
space for the condition of the job, signed by the 
operator and the customer. 

Q. What is the next exhibit? 

A. Receipt, in duplicate. When one of our serv- 
icemen has to collect money, he gives a duplicate 
receipt. These are numbered and he must account 
for the numbers. 

Q. Whom does the duplicate go to ? 

A. The duplicate goes to the owner and he brings 
the other in with the money, the cash. 

Q. How about Exhibit No. 15? Does that have 
any bearing on your business ? 

A. This is an application blank. 

Q. When do you require applications? 

A, When a man comes in to ask us for work, if 
we are interested or think he would make an oper- 
ator, we ask him to fill out an application blank. 
Then we more or less investigate and talk it over 
and when we need a man we pull these application 
blanks out, [45] and the one we want we call in, or 
get them in and give them a chance to work for us. 

Q, Do you know whose application blank that is ? 

A. T do. This is Charles Brewer, Charles P. 
Brewer. 



vs. Charles P. Brewer, et al. 1?5 

(Testimony of Theodore C. Sibert.) 

Q. Does that application state whether he had 
any previous experience in pest control or not ¥ 

A. It does. He had no previous experience. 

Q. So far as you now, either from this applica- 
tion or otherwise, had Charles P. Brewer any ex- 
perience or service or training in pest control prior 
to the time he came to work for the Paramount Pest 
Control Service? 

A. His application says none. 

Q. What is Exhibit No. 16? A. 16? 

Q. Yes. 

A. That is another application blank. 

Q. Is it like the other one or more recent in 
form? 

A. No, it is a little later one. This is an 
earlier one. 

Q. What is No. 17? 

A. This is No. 16 is filled out. 

Q. What is No. 17? 

A. It is an application blank. 

Q. An application blank? A. Yes. 

Q. What is No. 17? [46] 

A. You misunderstood me, Counsellor. 17 is 
the blank one. 16 is filled out. 

Q. What is 17? 

A. It is the latest application form we have. 

Q. For what purpose ? 

A. When a man comes to work for us, or we are 
interested in him, we w 7 ill have him fill an applica- 
tion form out. 



13G Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. Isn't that for the registration of poisons? 

A. No, sir. 

Q. Isn't it? 

A. Yes; I am sorry, sir, it is. I had the wrong 
one. 

Q. Yes. 

A. No. 17 is an " Application for Registration of 
Economic Poisons," under the Department of Agri- 
culture in California. 

Q. Explain why that is required, if it is, and 
what is done with it? 

A. This controls the packaging laws of the State 
of California. It controls any poisons that is pack- 
aged. It has to be registered in the correct formula, 
with the amounts of poisons, and the skull and cross- 
bones on it, and the antidote, and the date and ad- 
dress where they are packaged and put into the 
formulation and sealed, sir. 

Q. Referring back to that series of exhibits num- 
bered 5-1 to 5-26, relating to your labels, is there any 
particular designation on those relating to your 
products? [47] 

A. These are all products that we have formu- 
lated. 

Q. Get my question. Is there any particular 
designation on them? 

A. This is a license, an application to register. 

Q. No. I am not talking about that now, Mr. 
Sibert. I am calling your attention again to the 
labels in Exhibit No. 5-1 to No. 5-26. Is there any 



vs. Charles P. Bretver, et al. 137 

(Testimony of Theodore C. Sibert.) 
particular designation on those labels relating par- 
ticularly to your products'? 

A. These are all our products, every one of them 
labels. 

Q. Is there any particular designation on them 
relating to your products? What about that man 
on there? A. This man is our trade-mark. 

Q. What is it there? What does it say? 

A. "Doc Kilzum, his patients all die." 

Q. Is that your trade-mark? 

A. That is our trade-mark. 

Q. That is what you put out? 

A. That is right. 

Q. Going back to Exhibit No. 17-A, what does 
that relate to ? 

A. This is an application for Structural Pest 
Control Operator's License. 

Q. How is that required and what do you do 
under it? 

A. Under this application you are — the law says 
you must be in the pest control business in Cali- 
fornia at least one year before you are allowed to 
apply for the operator's license of [48] California. 
This is the written examination under the State 
Board of Structural Pest Control of California. 

Q. What is No. 18? 

A. "Structural Pest Control Field Representa- 
tive's License." 

Q. What is the difference between the field rep- 
resentative's and the operator's license? 



138 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

A. This field representative is a worker or 
serviceman. 

Q. What is No. 19? 

A. Application for a bond, Fidelity and Casualty 
Company of New York. 

Q. Do you procure bonds on employees? 

A. After a man goes to work for me, he fills this 
application out and we procure the bond. 

Q. Is that required? 

A. That is required of every employee. 

Q. What is No. 20? 

A. By-laws of the Structural Pest Control 
Board, instructions to applicants for a field rep- 
resentative's license, how to apply, and the condi- 
tions of study. 

Q. What is the Structural Pest Control Board ? 

A. The Structural Pest Control Board is elected 
direct by the Governor of the State. 

Q. Elected? You mean appointed? 

A. They are appointed, yes, as a rule. 

Q. Yes. [49] 

A. They are appointed in judgment over the 
businessmen of the structural pest control in Cali- 
fornia, to see that they live up to the regulations 
and rules which they set forth. 

Q. Is it limited to the State of California? 

A. That is limited to the State of California. 

Q. This particular instrument, Exhibit 20, what 
is that? 

A. This is instructions to applicants for a field 
representative 's license ? 



vs. Clmrles P. Brewer, et al. 139 

(Testimony of Theodore C. Sibert.) 

Q. Then a field representative, as I understand 
it, is not only under your direction but under the 
direction of the Board? A. That is right. 

Q. No. 20-A, what is that? 

A. This is the same, only different ; instructions 
to applicants for an operator's license. I mean 
for an operator, not a field representative's. Sorry. 
This is sent from the State Board of California to 
the operator with instructions. 

Q. What about No. 21? 

A. This relates to the examination and the de- 
tails of — it says " Bylaws for the Internal Admin- 
istration of the Structural Pest Control Board." 

Q. What measure do you take, Mr. Sibert, when 
you have employed a man who is qualified in all 
these respects to serve the company in the pest con- 
trol service, to keep track of what he is doing? 

A. I don't quite understand your question. 

Q. Say that you have a man in your service 
now. He is qualified, [50] otherwise. How do you 
keep track of him after you get him employed? 

A. We have our service slips that they turn in 
every day, a time sheet showing what work they did 
for that day. 

Q. Will you examine the next exhibit, No. 22, 
and see if that has anything to do with the matter? 

A. Time reports. We have time reports. We 
know where every man is and wherever he works 
that day, by our system we have in the office. 

Q. Whose time report is that? 

A. Carl Duncan's. 



140 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. Covering what particular time ? 

A. The week ending May 11, 1946. 

Q. How many sheets are in that exhibit relating 
to Carl Duncan? A. Eleven — ten. 

Q. Where do those sheets show that he did that 
work 1 ? A. In Portland. 

Q. What was he doing in Portland, Oregon, in 
May, 1946? 

A. Instructing Charlie Brewer and his men, 
breaking them in to show them how we have safety 
laws, breaking them in to the extermination field. 

Q. Why was that necessary with respect to 
Charlie Brewer? 

A. When he was sent up here, he wanted to 
keep an instructor here to help him. 

Q. Do I understand you that he had not com- 
pleted a sufficient [51] course to know what to do 
up here ? A. That is right. 

Q. How long did he continue under your in- 
structions ? 

A. Mr. Carl Duncan w T as in the employ of 
Charlie Brewer, as of the letter of the 24th. 

Q. The 24th? A. Of June— July. 

Q. What year? A. 1947. 

Q. You mean by that he was continuously under 
the instruction of Carl Duncan? 

A. So far as working up here was concerned. 
Carl Duncan was our field instructor. 

Q. Was Brewer continuously under his instruc- 
tion ? A. That is right. 

Q. What is Exhibit No. 23? 



vs. Charles P. Brewer, et al. 141 

(Testimony of Theodore C. Sibert.) 

A. It is the time slips for Raymond Rightmire. 

Q. Located where? 

A. Portland, Oregon. 

Q. What was Rightmire doing here? 

A. He is a serviceman. 

Q. What do you mean by "serviceman"? What 
did he do? 

A. Service; puts out poisons and takes care of 
our instructions, how to do certain things. 

Q. State whether or not, after having trained 
these men, you [52] make any effort to keep them 
abreast of the times on any products? 

A. Yes. We get all the! literature we can that 
is put out. Mr. Bushing has contacts and that lit- 
erature is sent out to him — sent out to the field 
men by the branch manager or franchise manager. 

Q. Look at Exhibit 24 and state what that is? 

A. This is an authorized magazine, I know. It 
is wonderful information that is in these maga- 
zines for a pest control operator. 

Q. What is the name of that? 

A. "Pest Control and Sanitation, Home and 
Garden. ' ' 

Q. Is that provided to employees? 

A. We buy this magazine and send it to the 
branches, so the employees can have it. 

Q. Look at Exhibit No. 25. 

A. This is also the same information from Hy- 
man & Company, Denver. 

Q. Relating to what? 

A. Insect information. 



142 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. Was that also provided for the employees'? 

A. It is. 

Q. Is it a good publication? 

A. It is a good publication. 

Q. What is No. 26? [53] 

A. The same material. That is something new 
in the field ; spray barns for flies. It is a very good 
publication. 

Q. Now, Mr. Sibert, have you in general, with- 
out going into great detail, covered your pest con- 
trol business, beginning with the training of the 
employees and what is done to keep them acquainted 
with the progress of pest control, in general? In 
general, have you covered that? 

A. I believe I have, in general, sir. 

Q. How long have you known Charles P. 
Brewer? A. I believe in October, 1945. 

Q. What was the occasion of your meeting him? 

A. I met him in a home in Oakland, California. 

Q. Did you subsequently come to be associated 
with him in business? A. Yes. 

Q. How did that occur, and when did it occur? 

A. Mr. Brewer came into my office the first of 
the year, 1946, and asked for a possible opening up 
in the northern country. He said he was born in 
Spokane and would like to come up here, in this 
part of the country. 

Q. What did you do? 

A. I took his application and told him if any- 
thing came up we would let him know. 

Q. Is that Exhibit 15 that you have already 



vs. Charles P. Brewer, et al. 143 

(Testimony of Theodore C. Sibert.) 

mentioned'? A. That is his application, sir. 

Q. What then happened after you took his ap- 
plication in January? 

A. There was an opening come up and he hap- 
pened to come in just about the time there was 
an opening come up in Portland. 

Q. When did he start training for the Para- 
mount Pest Control Service? 

A. February 4, 1946. 

Q. How long did he train? 

A. He come up while he was still in training. 

Q. Did he subsequently come to the Northwest? 

A. He come to the Northwest around April 1st. 

Q. Whom was he serving at that time? In 
whose employ was he? 

A. In the Paramount Pest Control Service. 

Q. What was it at that time? 

A. A co-partnership. 

Q. A co-partnership of Fisher and yourself? 

A. That is right. 

Q. How long did that continue! 

A. To the first of July. 

Q. What happened then? 

A. He started on a franchise basis, 80-20, sir. 

Q. Now, it is claimed by the defendant, Brewer, 
in this case, and stated to the Court in opposing 
counsel's opening statement, that he was practically 
compelled to accept this franchise agreement of 
July 1, 1946. State whether or not Mr. Brewer 
had [55] signed the franchise agreement prior to 
that time? 



144 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

A. Mr. Brewer, before be came to work for us, 
was hired specifically for this job; we showed him 
the basis on which we worked men in this country; 
we gave him the exact terms which he signed and 
was working under and he took them home, and 
he knew exactly the basis — in fact, he made us 
promise before he came up here just what basis 
he would work on, and w r e kept our word. 

Q. Did he sign any instrument at the time he 
came up here in April ? A. He did. 

Q. What was that? 

A. That was a branch manager agreement. 

Q. Did he read it before he signed it ? 

A. He did. 

Q. When it came to the franchise — you call it 
a franchise. When he made his sales agent's agree- 
ment of July 1, 1946, when did Mr. Brewer get 
a copy of that? Can you give the date and time? 

A. Yes. 

Q. When was it? 

A. He got a copy of that two days before he 
come to work for us and took it home. You mean 
of this specific — he got a copy of the exact 

Q. That does not mean anything. [56] 

A. The difference is it is blank. 

Q. You say it is blank? 

A. No. The district in which he works and his 
boundary lines, exactly the same. 

Q. Otherwise the form you gave him was ex- 
actly the same as the executed franchise? 

A. It is, sir. 



vs. Clvarles P. Bretver, et al. 145 

(Testimony of Theodore C. Sibert.) 

Q. When did he get that form'? 

A. Two days before he came to work. That 
would be February 2nd. You mean this form in 
front of us? 

Q. Yes. 

A. This form, he got that the first of July. 

Q. When did he get that form so that he could 
know the contents of this exhibit? 

A. He had it two days before he came to work, 
which would be February 2nd. 

Q. Then, do I understand you correctly that 
you say he knew of this franchise form from Feb- 
ruary, 1946, to July, 1946? A. Yes, sir. 

Q. Did he ever ask you any questions about it? 

A. No, sir. Excuse me. Correction, sir. We 
had talked it over as to the things about it and 
he asked questions at that time before he went to 
work for us. 

Q. Before he went to work? A. Yes. [57] 

Q. At the time he signed this exhibit, No. 7, 
the sales agent's franchise, did he know the con- 
tents of it? 

A. They were explained to him, yes, sir. 

Q. Do you recall where Mr. Brewer signed that 
agreement. 

A. Signed that agreement in Portland. 

Q. Where was it signed by Mr. Fisher? 

A. In Oakland. 

Q. Has that agreement been recognized by the 
parties since it was signed? A. It has. 



146 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. After July 1, 1946, how long was it before 
the instrument was actually signed, do you know, 
by both parties? 

A. Mr. Brewer signed this, I think, before July 
1st and Mr. Fisher, and then it was mailed out to 
me. I was not in the office and Mr. Fisher sent 
it out around the first of July, and it was sent back 
to him. 

Q. How long was that agreement in that form 
lived up to by the parties? Was any change ever 
made in that agreement? 

A. Only change of payment. 

Q. Relating to what paragraph of that instru- 
ment? A. 5. 

Q. Paragraph 5. What was the change made 
at that time in Paragraph 5 in the matter of 
payment? 

A. The agreement by Mr. Brewer and myself 
on September 12th. 

Q. What year? [58] 

A. 1946, in the breakfast room. An agree- 
ment 

Q. Whereabouts? A. At his home. 

Q. Whereabouts? A. In Portland, sir. 

Q. Portland, Oregon? A. Yes. 

Q. What was the agreement and why did you 
make it? 

A. Our visit with them was very friendly. Of 
course, I guess that is immaterial. Mr. Brewer had 
a plan and that was an extension plan. He gave 
me a list of potential business that he could sign 



vs. Charles P. Brewer, et al. 147 

(Testimony of Theodore C. Siberi) 

up and he expressed himself as to the cost of the 

signing up of new business, which is true. 

In other words, he told me if he could afford 
it he could sign up enough monthly business to 
bring the present business up to $3,000 monthly 
basis in Portland. Then he brought up the amount 
of money which he had drawed as a drawing ac- 
count, and I expressed myself in this manner, that 
I appreciated a man that wanted to expand the 
business and I didn't want to make any hardship 
on him, and if he had taken so little home a month 
that I would match that dollar for dollar and that 
would give him a surplus to take care of this ex- 
pansion of business which he said he had in mind. 

That was merely a verbal agreement and that 
was supposed to be — We talked that we would go 
back from July 1st, [59] 1946, and end January 
1st or December 31st. 

Q. December 31st of what year? 

A. 1946. 

Q. You say that you expressed yourself. Was 
that said to Mr. Brewer ? 

A. That always has been said. 

Q. Was this said to Mr. Brewer? 

A. It was said, yes. 

Q. Did you, thereafter, go on that basis for the 
period of time from July 1, 1946, to December 31, 
1946? A. We did. 

Q. And it was on your personal responsibility 
that you did that? 



148 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

A. Yes — No, sir. I have to report to the Board. 

Q. Did you do so? A. I did, sir. 

Q. When? A. In December. 

Q. This occurred when; this conversation with 
Brewer occurred when? A. September 12th. 

Q. And you reported it to the Board in De- 
cember? A. In December. 

Q. Why didn't you do it before? 

A. It slipped my mind. 

Q. When you did report, to whom did you re- 
port? [60] 

A. To Mr. Fisher and Mr. Hilts. 

Q. Was it satisfactory? A. It was. 

Q. Now, there is a claim on the record by Mr. 
Brewer that this adjustment was on the basis of 
a division of the profits. Was that agreement ever 
made? A. Never. 

Q. He claims it was made about Thanksgiving 
time in November — November, 1946. Was any 
agreement of that kind made in November, about 
Thanksgiving time in November, 1946, or at any 
other time? A. No, sir, there wasn't. 

Q. Did you see Mr. Brewer in November? 

A. I did, sir. 

Q. Where? 

A. He come down from Portland to visit and 
to relax, he said. 

Q. Where did you see him? 

A, At my home. 

Q. Anyone with him? A. His wife. 



vs. Charles P. Brewer, et ah 149 

(Testimony of Theodore C. Sibert.) 

Q. How long did they stay at your home in 
November? A. Ten days. 

Q. Was there any feeling — Or, what was the 
attitude between you and the Brewers, your family 
and the Brewer family at that time? 

A. Very close, sir. We had a good time; no 
disturbance whatever. [61] 

Q. Was there any mention of business? 

A. Oh, no, no mention much of business; just 
expansion and, of course, there was talk at that 
time about certain men he had in his employ, but 
that is all, little short talks. 

Q. He states in one place that he went to the 
office and complained to you that he could not get 
along on the basis that you allocated to him. Was 
there any such a thing as that? A. No, sir. 

Q. Did he come to the office at all? 

A. He did, for a little while. 

Q. For what purpose? 

A. To pick up chemicals to bring back. 

Q. After you talked to Mr. Brewer in Novem- 
ber, when did you again see him? 

A. January 20th. 

Q. What year? A. 1947. 

Q. Where? 

A. In the office, at Portland, and also at his 
home. 

Q. Did you stay at his home then? 

A. Yes, that night I stayed at his home. 

Q. Was there anything said or done in connec- 
tion with either the agreement — By the " agree- 



150 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 
merit " I mean the franchise — as of July 1st or the 
dollar-home dollar-company agreement of Septem- 
ber 12th, 19461 [62] 

A. It wasn't mentioned, sir. 

Q. What, if anything, relating to this business 
did you discuss on January 20th ? 

A. Mr. Brewer expressed himself about the 
Eastern Oregon run. He had the complete total 
of miles, the cost of operation, the long distances 
between stops, so to speak, and expressed himself 
that it was costing a lot of money to run the East- 
ern Oregon run. He asked me what we could do 
about it and we went into a separate deal. He 
needed help ; he was up here by himself ; he needed 
help to come in and help him, so I agreed that I 
would go back to Oakland and would send the ac- 
counts that we had in Eastern Oregon and I would 
take a salesman and a company serviceman 

Q. When you say "I", whom are you referring 
to! A. We. 

Q. To your company? 

A. I refer to our company. 

Q. Yes. All right. 

A. This would take a salesman and a company 
serviceman, and we were to run that Eastern Ore- 
gon run, take a whole month for it ; we would start 
in the south and come up to Portland and take a 
whole month and work. 

Q. Whereabouts in the south? 

A. Start at Klamath Palls. 

Q. Yes. 



vs. Charles P. Brewer, et al. 351 

(Testimony of Theodore C. Sibert.) 

A. And work right straight around the route, 
to build up a [63] route and then, if it wasn't 
built up in one month's time, to make the trip back, 
and then go back home to Portland. We agreed 
to the payments and the cost of this investigation; 
with the men on the payroll of Oakland we would 
continue to leave them on the payroll, and keep 
a separate and complete accounting of all costs, 
hotel bills and expenses and, at the end of the 
venture, if there was anything made in the vent- 
ure, the Oakland office and the Portland office would 
divide that dollar for dollar. If there was any- 
thing lost, the Oakland office would take their do^ 
lar loss and the Portland office would take their 
dollar loss. 

Q. When you say " Portland office", do you 
mean yourself or do you mean Mr. Brewer ? 

A. Brewer. 

Q. When you speak of the Portland office you 
are referring to Brewer, the agent? 

A. He was the agent. 

Q. What was done in the matter of expenses 
and salaries of these men? 

A. We paid all or most of the salaries. There 
was a little that Mr. Brewer paid, but we paid 
practically all the salaries and expenses. 

Q. What was the agreement with respect to 
salaries and expenses ? 

A. Well, we would make an accounting of it 
and we would pay the salaries of the men. 



152 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. You mean your company would pay the 
salaries ? [64] 

A. Yes. Our company would pay the salaries 
and expenses and finance the trip and divide the 
remuneration out of it and we would split the 
costs — we would split the remuneration or the loss. 

Q. I will repeat this by way of summary to 
see if I have got you correctly. The expenses of 
this trip, including costs and salaries, were to be 
divided equally between Brewer and your company? 

A. Yes. 

Q. If there was a loss, it was so shared, is that 
right? A. Yes. 

Q. And if there was a profit, it was so shared? 

A. Yes. 

Q. Do you know how it turned out, whether 
there was a loss or a profit? 

A. There was a loss. 

Q. Has Mr, Brewer ever paid any portion of 
that? A. No, sir. 

Q. I presume you went ahead and carried out 
this separate agreement that you have described? 
That was done by the parties, was it? 

A. Yes. 

Q. Whom did you send out from the Oakland 
office? A. DeGrey Brooks and Jack Ahem. 

Q. When, after January 20, 1947, did you again 
see Mr. Brewer? [65] 

A, When did I, after the January trip? 

Q. Yes. A. March 29th. 

Q. What was the occasion then? 

A. Our regular trip up here. 



vs. Charles P. Brewer y et at. 153 

(Testimony of Theodore C. Sibert.) 

Q. Anything said or done at that time in rela- 
tion to this business that bears on this case, that 
you can recall? 

A. You mean our agreement of September 12th ? 

Q. Was that discussed then? A. No, sir. 

Q. Did your discussion at that time bear on any 
matters here at all? A. No, sir. 

Q. What did you discuss, generally? 

A. Just things in general. 

Q. When, after March, did you again see Mr. 
Brewer? A. June 22nd. 

Q. Where? A. June 17th. Correction. ' 

Q. Where? A. In Portland, Oregon. 

Q. Who was present? 

A. Mr. Hilts, myself and Mr. Brewer. 

Q. Who is Mr. Hilts? 

A. One of our associates, our auditor. [66] 

Q. What was discussed at that time with Mr. 
Brewer present? 

A. Things in general was discussed. There was 
two or three outstanding things. Mr. Hilts made 
the audit of the books and then we made a budget, 
which I always had when I came in it, to find out 
how much business I done and how much it cost 
and, naturally, being president of this concern, I 
like to see everybody make a profit. 

Q. Go ahead. 

A. Mr. Brewer, Mr. Hilts and myself went over 
his books. We took a recap of the cost of each 
man that he had working for him, the payroll, the 
expenses, the car allowance, also the rent, telephone 



154 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

charges, advertising, his expenses, and allowed $150 

for an office girl. 

We deducted that from the amount of business 
done in May, added 20 per cent as of the 80-20 
agreement, and it came out that Mr. Brewer's part 
would be $855. 

Everything was very congenial. Mr. Brewer ex- 
pressed himself that he couldn't afford to stay on 
the dollar-for-dollar agerement. 
i#. Why? 

A. Because the budget showed that he could 
make more money on the 80-20 agreement, as in 
the franchise. 

Q. Was there any $3,000 figure in there? 

A. Well, that had ended my verbal agreement 
as of September 12th, although I didn't bring that 
up or didn't bother him. Mr. Brewer's [67] agree- 
ment was that if we would match the few dollars 
he would take home he could have the business 
built up by the first of the year, up to $3,000, and 
it never occurred, but that was the basis. It showed 
a balance — it showed that Mr. Brewer had done 
$3,000, 

Q. When did that show? 

A. The last of May. 

Q. 1947? A. 1947, yes. 

Q. Was that taken into consideration in your 
budget? 

A. Yes. That wasn't in our verbal agreement, 
although I didn't press anything. 



vs. Charles P. Brewer, et ai. 155 

(Testimony of Theodore C. Sibert.) 

Q. Do you mean that the verbal agreement of 
September 12, 1946, ran clear through to May? 

A. The agreement 

Q. Did it or didn't it run clear through to 
May? 

A. We allowed it to run clear through to May. 

Q. When did you make that agreement? In 
other words, I don't think you understand me. 
When you made the agreement of September 12, 
1946, did that agreement run clear through to 
May of 1947? A. No. 

Q. When did it run to^ 

A. It ran from July 1, 1946, to January, or 
December 31, 1946. 

Q. What did you mean by saying that the verbal 
agreement was [68] taken cognizance of? 

A. As I remember our agreement, Mr. Brewer 
went back on the 80-20 in January or possibly Feb- 
ruary. 

Q. That does not answer my question. What 
bearing did it have on May, 1947? 

A. May, 1947, we, ourselves, because of this 
Eastern Oregon expense and loss, put the Portland 
office back on the dollar-for-dollar. 

Q. When did you do that? A. May 15th. 

Q. Did you see Brewer at that time? 

A. No, sir. 

Q. By whom was that agreed to? 

A. In conference with Mr. Hilts and myself. 

Q. Was Mr. Brewer present? A. No, sir. 



156 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. Was it at his solicitation'? A. No, sir. 

Q. How was he notified of it? 

A, By letter. 

Q. What was the date of that letter? 

A. May 15th. 

Q. March 15th, isn't it? 

A, March 15th. As I recollect, March 15th. 

Q. March 15th? [69] A. Yes. 

Q. When you have been saying "May" all the 
way through, that was in error? 

A. That is right, Counsel. 

Q, I want you to refer to Exhibit No. 29 and 
ascertain if that is the letter you have reference to ? 

A. It is. 

Q. What is the date of that letter? 

A. March 15, 1947. 

Q. Do you wish to correct your testimony to 
conform to March rather than May? 

A. I was confused. T wish to correct my testi- 
mony. 

Q. Going back to this conference in June, state 
what you did with respect to the adjustment, if 
any, of profits over the period from January 1st 
to June 30, 1947? 

A, Mr. Hilts had been north and had received 
word that the Eastern Oregon venture, which I 
mentioned before, that separate deal, was getting 
bad; he had got reports from Mr. Brewer, so we 
had a meeting, and Mr. Hilts had not very defi- 
nitely understood the deal that Brewer and we 
made: he heard about it but he didn't understand 



vs. Charles P. Brewer, et cd. 157 

(Testimony of Theodore C. Sibert.) 
it. That was the first meeting we had had with 
Mr. Hilts; he had been out of town and it was the 
first time we had gotten together for quite awhile. 

We figured, as to Eastern Oregon at the time,. 
on putting in this new work to make the Eastern 
Oregon district pay, [71] that it would be nice' to 
show Brewer that we were not a company that 
would demand everything, you know, but would' 
help him and cooperate with him, so we, ourselves; 
although he had paid his January and February 
franchise on the 80-20 basis, as per agreement, we 
thought it would be nice to show that we were 
trying to work with him and not take advantage of 
him, and that we would go back on the doilar-per- 
dollar agreement, and that is what we tried to ex- 
plain in this letter. 

Q. What letter are you referring to ? 

A. Exhibit 29, your Exhibit 29. 

Q. That is the March 15th letter? 

A. The March 15th letter. 

Q. All you have said has been relating to a 
matter in March, 1947 ? A. Yes. 

Q. What my question asked for was in June. 

A. Oh. 

Q. I think you still have the dates and the times 
confused, Mr. Sibert. A. I am sorry. 

Q. It is all right. As I understand, all you have 
said shows why you wrote the letter, why the let- 
ter of March 15th was written by Hilts to Brewer? 

A. Yes. 



158 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. Calling your attention to June of 1947, not 
March but June [71] A. Yes. 

Q. Did you have an accounting with Mr. Brewer 
in June'? A. Yes. 

Q. Who was present? 

A. Mr. Hilts, myself and Mr. Brewer. 

Q. Did Mr. Hilts compile a statement at that 
time of the financial obligations between Brewer 
and the company*? A. Yes. 

Q. Do you know whether or not it was discussed 
with Mr. Brewer*? A. It was. 

Q. Do you know whether or not it was agreed 
to by Mr. Brewer? It was. 

Q k How do you know ? A. I was there. 

Q. Any other reason? 

A. Well, I was there and heard it, and that was 
the time we made the budget that I was talking 
about. 

Q. Did Mr. Brewer make any payment at that 
time? A. No. We asked for it. 

The Court: Recess until one-thirty. 
(Recess to one-thirty p.m.) [72] 
(Court reconvened at one-thirty o'clock p.m., 
January 20, 1948.) 

Direct Examination 
(Continued) 
By Mr. Rankin: 

Q. I think when we closed our morning session, 
Mr. Sibert, I was directing your attention to June 
20th, the conversation between Mr. Hilts, Mr. 



vs. Charles P. Brewer, et al. 159 

(Testimony of Theodore C. Sibert.) 
Brewer and yourself, and you had testified con- 
cerning the March 15th arrangement. 

Now, again directing t your attention to June 
20th— I have called it June 20th ; I think the exhibit 
was dated June 20th ; but when was your visit here ? 

A. I came up on June 17th. 

Q. You came up here on June 17th? 

A. Yes. 

Q. Whenever we designate that conference, 
whether it was June 17th or 20th, we are talking 
about the time when you, Hilts and Brewer con- 
ferred on the amount that was due to Paramount 
from Brewer. A. That is, 1947? 

Q. June 17th to 20th, 1947. A. Yes. 

Q. So that we will have this clear, it is not re- 
lated to the March conference. Will you state 
where you met in this June 17th conference? 

A. In the Paramount Pest Control office of 
Portland. [73] 

Q. Where is that office located? 

A. Southwest Park. 

Q. Was there an office there before Mr. Brewer 
took charge? A. Our office down there, yes. 

Q. Where was that? 

A. In Mr. Taylor's home. 

Q. In this June 17th conference, who was pres- 
ent? A. Mr. Hilts, myself and Mr. Brewer. 

Q. What was discussed in relation to this busi- 
ness at that time ? 

A. There was a recap made of his business, a 
recap made of his busines, as of May, the end of 



160 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 
May. Mr. Hilts took the figures off the books, and 
then we three made a recap, a budget — we took the 
wages of each man, took the expenses, the chemicals 
used, gasoline, auto expense, rent, advertising, 
phone, all things pertaining to the business, as far 
as costs was concerned. Then we took 20 per cent 
of the gross business done, deducted that from the 
business in May and there was $855 left for Mr. 
Brewer. 

Q. How much did you get? 

A. Six hundred — 20 per cent. 

Q. You do not mean 20 per cent of $855 ? $855 
and $600 made a total of so much. Is that what 
you mean, something like that? A. No. 

Q. Tell me this: Did Mr. Hilts, as your audi- 
tor, make a detailed accounting? [74] 

A. This budget, you mean? That was done by 
Mr. Hilts, myself and Mr. Brewer. 

Q. Then was there a statement made as to how 
much Mr. Brewer owed the company? 

A. There was. 

Q. Who compiled that statement? 

A. Mr. Hilts and Mr. Brewer. 

Q. What was the nature of the conversation as 
to whether or not it was friendly or disagreeable, 
in any feature? A. It was very friendly. 

Q. Did Mr. Brewer have any criticism or objec- 
tion to anything that was done by the company? 

A. No; very friendly. 

Q. The record shows that he claims to have told 
you at that time that unless you carried on with 



vs. Charles P. Brewer, et ah 161 

(Testimony of Theodore C. Sibert.) 
the contract he had in mind, he was going — he was 
quitting you. Was anything said by Mr. Brewer 
about his leaving Paramount Pest Control Service? 

A. Nothing whatsoever. 

Q. You say in your testimony that the relation- 
ship was friendly. On what do you base that 
statement ? 

A. Well, when we made this budget, we agreed 
at that time to extend the dollar-for-dollar deal to 
the end of the fiscal year. 

Q. That was when? 

A. That would have been June 30th, and then 
go back on the [75] regular franchise, which was 
the 80-20 payment. 

Q. Did Mr. Brewer know that? 

A. This was his suggestion. 

Q. How do you mean it was his suggestion? 

A. Well, he stated that he could make more 
money according to the budget on the 80-20 pay- 
ment than he could on the dollar-for-dollar. 

Q. Could he? 

A. Yes. It, I think, was understood. 

Q. Will you state whether or not that was under- 
stood, that he wanted to go back on the franchise? 

A. It was understood. 

Q. Was there anything in your relations, other 
than what you have described, that disclosed their 
friendliness ? 

A. Well, Mrs. Brewer was down south. She left 
before I arrived in Portland. It was his little 
girl's birthday, and I suggested, before I left Seat- 



162 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 
tie, that if we could get plane reservations, that 
he and the little girl go back with me as our guests 
for the little girl's birthday present. 

When w T e got to Seattle — We tried to get reserva- 
tions in Portland. They were received in Seattle. 
I called him from Seattle and told him I had the 
reservations and was going to Spokane, and I got 
his reservation and the little girl's reservation and 
made a reservation on the same plane. The plane 
stopped in Portland. I got off, got his tickets, 
and we went [76] to San Francisco. 

Q. Did the little girl go with you 1 

A. She did. 

Q. Did you meet Mrs. Brewer or not? 

A. Mrs. Brewer, her sister and my wife met 
us at the airport in San Francisco. 

Q. Where did they stay? 

A. They went home that night with Mrs. Brew- 
ers' sister and then came over to my place. 

Q. Where? A. In Oakland. 

Q. How long did they stay there ? 

A. Four days — five days. 

Q. Was anything said that seemed to disturb 
the friendship during that period? 

A. We left very good friends. 

Q. Was any suggestion made at that time in 
connection with any of the business that he had been 
doing here? 

A. Everything seemed to be very fine and cor- 
dial and everything was good. 



vs. Charles P. Brewer, et al. 163 

(Testimony of Theodore C. Sibert.) 

Q. I have reference particularly to what I 
understood was some question about collections. 

A. Oh, yes. Mr. Hilts notified me over the 
phone there were a lot of accounts receivable. 

Q. Did you take that up? [77] 

A. Oh, I spoke to them about it. 

Q. State what their attitude was? 

A. There was no attitude, so much, to me. Mrs. 
Brewer seemed to have gotten mad over something. 
I don't know that it was over that or what it was, 
but it was nothing, as far as we were concerned. 

Q. When did you again see or hear from Mr. 
Brewer ? 

A. I saw Mr. Brewer in the hotel room next 
after he had sent in his letter that he was quitting, 
in August. 

Q. You say he sent in a letter? A. Yes. 

Q. Refer, in those exhibits you have there, to 
Exhibit No. 42. I will ask you if that is the letter 
to which you have reference. It is in the file here. 
I will ask you if that is the letter to which you 
have reference? 

A. Yes, this is the letter of June 24th. 

Q. July, isn't it? A. July 24th, yes. 

Mr. Rankin: Your Honor, this letter is pleaded 
in the pleadings. I shall not take the time to read it. 

Q. I note a provision of the franchise in w 7 hich 
there is a 90-day provision for terminating it. Is 
that the letter upon which the termination was 
based? A. It is not. 

Q. What was the termination? [78] 



164 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

A. This is the letter upon which the termina- 
tion was based, yes. 

Q. That is what I mean, but not in compliance 
with the contract? 

A. It was not in compliance with the contract. 

Q. When did you receive that letter? 

A. This letter came into my office June 26th. 
It was written June 24th. 

Q. It shows on its face it is July. 

A. I mean July. I am sorry. July. 

Q. Had there been anything, up to the date of 
the reception of that letter, in July, 1947, that indi- 
cated to you that Mr. Brewer was dissatisfied with 
his association with Paramount Pest Control 
Service ? 

A. Nothing whatever. It was just the reverse. 
He always said he had the best business in Para- 
mount Pest Control Service, always bragged on it, 
and was very satisfied. 

Q. Had there been anything indicating a dis- 
satisfaction on Mrs. Brewer's part prior to the 
time of the reception of that letter? 

A. Nothing that I know of, sir. 

Q. Did she ever tell you anything that she was 
dissatisfied about? 

A. Just a few different things, which I paid no 
attention to. 

Q. Anything about the compensation her hus- 
band was receiving? 

A. Nothing. I never talked those things over, 
only with the parties involved. [79] 



vs. Charles P. Brewer, et al. 1G5 

(Testimony of Theodore C. Sibert.) 

Q. What did you do when you received this 
letter ? A. I was on my vacation. 

Q. Did the Brewers know you were going on a 
vacation? A. They did. 

Q. How did they know that? 

A. It was talked about when they were at my 
house, as my house guests. 

Q. When did you go on your vacation? 

A. Well, let's see 

Q. Where, first, did you go on your vacation? 

A. Up to Strawberry to build a cabin, with my 
wife. 

Q. Where is Strawberry? 

A. In California. 

Q. Were you there when this letter was re- 
ceived ? 

A. I was up on my vacation, yes sir. 

Q. What did you do when you got this letter? 

A. I immediately came into Oakland and then 
came up here. 

Q. What did you do while you were here? 

A. I called Charlie up and asked him to come 
and release the chemicals and equipment which he 
had. He came up to my room. He had refused 
to do that heretofore. He came up to my room 
and said he would release them. 

Q. Did he then give you any explanation as to 
this letter or any reason for his termination ? 

A. His explanation was only one, that he had 
to do it on account [80] of his family. 



166 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. Did he say why he had to do it on account 
of his family'? A. He did not. 

Q. Generally speaking, without going into de- 
tail, did you find then that there was any solicita- 
tion by Brewer, from your investigation and service 
with the company, of any of the patrons that had 
theretofore been patrons of Paramount Pest Con- 
trol Service? 

Mr. Bernard: Object to that as calling for hear- 
say testimony. 

The Court: He may answer. 

A. I sure did. 

Q. (By Mr. Rankin) : Did you find that there 
had been some solicitation ? 

A. Everywhere our boys went they found that 
trouble. 

Q. Now, a few questions that I think possibly 
I overlooked as I ran through this hurriedly. Did 
you expend any money in the organization of this 
business ? 

A. I have, lots of money. 

Q. Can you give the Court any idea of how 
much and on what phases of it you expended this 
money ? 

A. You mean the business in Portland? 

Q. No. I mean the business in general, first, and 
then in Portland. 

A. Yes. We take a certain amount of our profits 
to experiment with [81] 

Q. Just a moment, Mr. Sibert. Let us go back 
to the beginning. I realize it is going back to what 



vs. Charles P. Brewer, et al. 167 

(Testimony of Theodore C. Sibert.) 
you testified to, to some extent, this morning, but 
when you formed this business, you and Fisher, as 
a partnership, did you expend any money then? 

A. We expended everything we made into estab- 
lishing this business, every effort — That took all we 
had. 

Q. Was that the original expenditure — I mean, 
was the original expenditure all that you had put in ? 

A. Oh, we put everything that we had in the 
world into this business. 

Q. But, subsequent to its origin, state whether 
or not you still made expenditures in behalf of it? 

A. We did continue to do that. We spent money 
for education, for experimental work, and for get- 
ting the best chemicals to apply to these specific in- 
sects that will work the best for us. 

Q. I don't think I asked you anything about 
Duncan. When did Duncan come into your employ? 

A. In 1942. 

Q. And what did he do? 

A. He was a serviceman for quite a few years 
and he was very adaptable to teaching field men, 
to break in servicemen, show them the correct way 
to distribute the poisons, and to mix the inert ingre- 
dients in certain poisons and place them in a safe 
place — in containers and so forth, that is necessary 
to keep from contaminating foodstuffs and injur- 
ing carpets, varnishes [82] on floors and so forth. 

Q. Was he a very good man in your employ? 

A. Duncan was a very fine employee. 



168 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. I think you testified this morning you sent 
him up here to instruct Brewer. Did he continue 
to remain in the employ of the company after you 
sent him up here'? A. Yes. 

Q. When did he terminate his services, as far 
as you know, with Brewer? That would be August 
1st, 1947? A. Yes. 

Q. Have you tried to get service upon him in 
this case? A. I have, sir. 

Q. Do you know Merriott? 

A. Not personally. He was hired — I don't know 
Merriott personally. 

Q. Did Mr. Brewer ever ask you for permission 
to hire Merriott? A. No, sir. 

Q. Is that a desirable feature of your contract, 
that you ask the agent to tell you whom and when 
he employs men? A. The contract 

Q. Is it a desirable feature of your contract? 

A. No, it isn't. 

Q. You don't understand my question. 

A. I am sorry. 

Q. What? [83] 

A. It is desirable. I know what you mean now. 
It is a desirable feature of our contract. 

Q. Why? 

A. Because we know we have more experience in 
hiring men than these men do out here, and it is in 
our contract that we desire to help hire their men, 
and we reserve the right to eliminate them from the 
service at any time. 



vs. Charles P. Brewer, et al. 169 

(Testimony of Theodore C. Sibert.) 

Q. State whether or not they have a responsible 
position in the performance of work in connection 
with poisons ? A. That is true. 

Q. How much of the information as to these for- 
mulas and methods of application and so forth did 
you give to your employees ? 

A. All that is necessary, so that they can do 
their work in an efficient professional way. 

Q. Did you give them the detail of the composi- 
tion of any of your formulas and poisons ? 

A. You mean the formulation of the formulas 
themselves ? 

Q. Yes. 

A. Only to the extent where they must insert 
the inert ingredients. 

Q. Did you ever know, in connection with Mr. 
Rightmire, Mr. Duncan or Mr. Merriott, that they 
were leaving your employ prior to the time that they 
went with Mr. Brewer? 

A. I knew nothing. It was a big surprise. 

Q. They never notified you, either verbally or 
in writing? [84] A. No, they didn't. 

Q. Did they ever personally give you any ex- 
planation why they left you? 

A. They did not. 

Q. Did you, at the time you came up here, ask 
for and secure an inventory from Mr. Brewer of 
whatever he had that you were entitled to purchase 
under your franchise ? A. I did. 

Q. Did you get the inventory? 

A. After I got here, we got the inventory. 



170 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. Did yon get delivery of all materials that you 
found by that inventory you had a right to pur- 
chase ? 

A. We got delivery of what was in the ware- 
house. 

Q. Were there other materials that you did not 
get delivery of? A. Yes. 

Q. This letter that is in evidence as terminating 
his association mentions that he might want some 
of these things "in the future." Do you know what 
he had reference to when he states he might want 
those things "in the future'"? 

A. I did not. 

Q. With respect to his living up to his contract, 
were there any features that you recall that he did 
not perform which, under your operation of the 
company, he was required to do? For example, let 
me expedite this so as not to take too much time 
in your consideration. [85] 

The contract provides, Paragraph 4, Page 2 of 
the contract, that he will take all contracts in the 
name of the company. I mean, take contracts in 
the name of Paramount Pest Control Service ? 

A. Yes. 

Q. Will you turn to Exhibit No. 40-A. 

A. I have it, sir, 40-B. Just a minute. 40-A. 

Q. Is that supposed to be in the name of Para- 
mount Pest Control Service? 

A. 40-A is an expense account. 

Q. Let me see it. May I see it, please? I prob- 
ably have the wrong number here, apparently. Yes, 



vs. Charles P. Brewer, et al. 171 

(Testimony of Theodore C. Sibert.) 
that is the wrong number. There are two 40- A 's ap- 
parently. < 

What I have reference to is this Indenture of 
Lease, "Made this 1st day of November, 1946 j by 
and between The House of Celsi, an Oregon part- 
nership, hereinafter called the Lessor, and C. P. 
Brewer, doing business as the Paramount Pest Con- 
trol Service, 519 N. W. Park Avenue, hereinafter 
called the Lessee." 

First, how do you indicate whether you have serv- 
iced a particular place or not? 

A. We have a card that we hang up. 

Q. Is that the card? 

A. That is our card. 

Q. It reads: " To Our Patrons. We have Para- 
mount Sanitary System. An assurance of cleanli- 
ness." [86] 

Did Mr. Brewer put out a similar card when 
servicing patrons? A. He did. 

Q. Is this the card? 

A. This is the card. 

Mr. Bernard: Have you got an exhibit number 
on that? 

Mr. Rankin: Yes, just a moment. It is 40-A. 
There are two 40-A's. 

Mr. Bernard: That is all right. That is close 
enough. 

Mr. Rankin: I also want to offer in evidence, 
your Honor, a bill of sale. No, that has been of- 
fered — I am sorry. But I do want to call this* to 
your particular attention because it is the one Mr. 



172 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Sibert signed afterwards. Do you gentlemen have 

any particular objection to this because of that 

fact? 

Mr. Bernard: No. 

Mr. Rankin : Thank you. You may cross-ex- 
atnine. 

Cross-Examination 
By Mr. Bernard : 

Q. This partnership, you say, was formed in 
1937, was it? A. No, sir. 

Q. What year? A. 1938. 

Q. Had you been in the pest control business 
prior to that time? A. I had. [87] 

Q. What other work 

A. I want to answer that exactly right. I had 
been in business, but not for myself before. 

Q. What other business were you doing at that 
time? 

A. I am a general contractor, building superin- 
tendent, carpenter work, cement work, plaster 
work. 

■i Q. How long did you continue those occupa- 
tions after 1938? 

A: I never continued those only in my own 
work. 
t Q* Did you continue in those occupations? 

A. Only in our work. When we first started, 
I worked at carpenter work. 

Q, How long did you continue in those occupa- 
tions after 1938? 



vs. Charles P. Brewer, et cU. 173 

(Testimony of Theodore C. Sibert.) 

A. You see, sir, those occupations is in Our 
business. We do termite work. We are still con- 
tinuing carpenter work, cement work and platsteu 
work. 

Q. What other business was Fisher in at the time 
the partnership was organized ? ' 

A. He was in the extermination business. 

Q. Where was your place of business wh^n 
Brewer went to work for you ? 

A. This is '38. The head office was 638 Sixteenth 
Street. 

Q. Where? A. Oakland. 

Q. How big a place did you have? 

A. We owned our own building — we own our 
own building and [88] have quite a space. 

Q. How big a place? 

A. I don't know the exact size of the building. 

Q. What date was it Brewer came to work 
for you? 

A. July 4th, according to our records. February 
4th ; sorry, February 4th. 

Q. February 4th? A. 1947. 

Q. What date did he come to Portland ? 

A. Around the first of April. 

Q. You have referred to certain labels which 
are in evidence here. Those labels are put on the 
cans of poisons or preparations, aren't they? These 
labels that you referred to in your evidence are put 
on the cans of poisons or preparations? 

A. Yes, sir. 



174 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. Those labels contain the ingredients, do they? 

A. Those labels contain the ingredients that are 
in the cans. 

Q. So anybody that got hold of one of the cans 
could see what the ingredients are ? 

A. That is right. 

Q. You say you do not put on the label the inert 
ingredients ? 

A. I did not. Some labels you do and some labels 
you don't, but the inert ingredients, they have to be 
in there. 

Q. What is there that is secret about these con- 
coctions or formulas that you give your salesmen 
to use or the other men [89] who work for you to 
use? What is there secret about it? 

A. You understand, Mr. Bernard, the contents 
of i the label is merely the quantity to the gram. 
That is on the label on the package. That is the 
law. The secret is the formula in which they are 
melted or mixed together to get a certain product to 
do a certain job and to kill a certain type of insect. 

Q. That is the secret part of it? 

A. That is the secret part of it. 

Q. Did you or your company ever, at any time, 
furnish any of this secret information to Mr. 
Brewer? A. Yes, sir. 

Q. When? 

A. From the time he started out to work for us. 
There is a certain portion of that he has to learn. 



vs. Charles P. Brewer, et al. 175 

(Testimony of Theodore C. Sibert.) 

Q. You mean to say you furnished Mr. Brewer 
any information as to how to concoct any of these 
formulas ? 

A. You misunderstand — That question can be 
answered Yes and No. There is certain chemicals 
that we concoct — You say "concoct" — We formulate 
certain chemicals with inert ingredients that is put 
out on the job. We have to show him how to do 
that. 

Q. Describe what you mean by "inert ingredi- 
ents." 

A. The inert is the volume of matter or liquids 
that is in the poison. 

Q. I see. What do they usually contain? 

A. In rat bait it is any type of stuff that will — 
You might [90] say, apples, carrots and so on, any 
type of bait — different types. In liquids it is 

Q. What is there secret about that? 

A. So much of this is put in a certain formula 
to get a certain strength and so it could be attrac- 
tive to a certain type of animal or insect. 

Q. Can't that information be secured through 
other sources than yourself? 

A. It might be, but not like Paramount gives 
it out. 

Q. Who do you say gave Mr. Brewer this infor- 
mation ? A. Mr. Duncan. 

Q. Did you? 

A. Not personally; some, yes. 



176 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. What information did you give him? 

• A. I have been with Mr. Brewer on several jobs 
and showed him lots of things, and we talked — gave 
him information of my past experience. That is why 
I came to see him. 

Q. You tell the Court what secret information 
you ever gave Mr. Brewer at any time about the 
formulas or concoctions that you put out for bait. 

A. You mean one definite, special thing? 

Q. Yes. 

A. You want the time and place ? 

Q. I want the information, what it was. Tell the 
Court what secret information you ever gave this 
man. [91] 

A. I gave Mr. Brewer secret information on fly 
or rat baits. 

Q. Information? 

A. What types of inert ingredients with a cer- 
tain amount of active poisons to put out as certain 
types of rat baits to do a certain job, to kill certain 
animals or insects. 

Q. Can that information be secured elsewhere? 

A. He can't secure my experience elsewhere. 

• Q. Your experience, as a matter of fact, he can 
secure from other sources — how to put these inert 
ingredients in with the poisons in order to kill rats 
or insects? There are other sources that put out that 
information? 

A. We are a service organization, not a sales or- 
ganization, and our formulas and our advice is more 
profitable to anybody than something that somebody 
has made for sale, and information thereof. 



vs. Charles P. Brewer, et al. 177 

(Testimony of Theodore C. Sibert.) 

Q. Have you been as definite as you can as to 
any secret information or formulas that you gave 
Mr. Brewer? 

A. Repeat that question. I don't understand, 
Mr. Bernard. 

Q. Have you been as definite as you can as to 
any secret information or formulas that you ever 
gave Mr. Brewer? 

A. I could have give him more secrets. I was 
definite in what he needed and what he could take 
at the time, and according to the situation thereof. 

Q. How long did this instruction continue dcwn 
there in California? [92] 

A. Until all his time there, two months. 

Q. What sort of work was he doing during those 
two months? 

A. He was doing — he was going with Mr. Dun- 
can to be broke in our service work. 

Q. He had been doing service work ? 

A. In going with Mr. Carl Duncan, yes. 

Q. He was in your employ in the laboratory that 
you speak about, wasn't he? A. No, sir. 

Q. When he came up here, then, in April, it was 
with the idea of making him manager of the Ore- 
gon territory, was it? 

A. That was our understanding, sir, before he 
went to work. 

Q. After he had been employed by you for about 
six or seven weeks ? 

A. We had that understanding before he ever 
went to work. I was merely keeping my promise. 



178 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. You figured that six or seven weeks' works as 
a serviceman rendered him capable of carrying out 
this tremendously important work of insect exter- 
mination in Oregon, as manager? 

A. Sir, I did not. 

Q. Why did you make him manager of the 
concern ? 

A. Because he was hired for this district and we 
sent somebody up here to help him. 
. Q. That was Mr. Duncan ? 

A. Mr. Hilts and Mr. Duncan, yes. [93] 
• ,Q. Did you come up at the time he was em- 
ployed ? A. Where, sir ? 

Q. Come up to Oregon? 
..•• A. I wasn't here when he came. I came up in 
April — He came the first of April with Mr. Hilts. 
He. brought Mr. Hilts up. Mr. Fisher arrived here 
April 6th, Mr. Bernard. 

Q. Where was the office of the Paramount Pest 
Control Service at that time ? 

;.. iA. I don't have the exact address but it was in 
Mr. Taylor's home. We had phone service — we had 
e. phone there, and we had phone service on Taylor 
Street. I don't remember. I could look it up for 
you. 
,.;Q. Was Mr. Taylor the previous manager? 

A. He was. 
; , ,Q. And the headquarters of the concern were out 
at his home, is that what you say 1 A. No. 

; . Q. Where were the headquarters? 



vs. Charles P. Brewer, et dl. 179 

(Testimony of Theodore C. Sibert.) 

A. The headquarters office and those things 
was in the office on Taylor Street. He merely had 
the poisons and things like that at his home and 
kept some books at his home. 

Q. The poisons and things of that kind were 
kept at his home? 

A. Yes. He had a storeroom which we were rent- 
ing there. 

Q. Do you know about how long Mr. Hilts was 
here at that time 1 A.I do. [94] 

Q. How long? 

A. Mr. Hilts came up with Mr. Brewer anil I 
came up the 23rd of April. We passed on the way, 
going back. I came up on the train. He left that 
day to go back to get his car to come back here. 

Q. Did Brewer have to take an examination in 
California before he came up here? 

A. He did not. 

Q. Do I understand you to say from the time 
Brewer came here to the time he wrote this letter 
of resignation that you had no disagreement be- 
tween yourselves at all, is that correct ? 

A. That is correct; the best of friends. 

Q. You did, however, in response to Mr. Ran- 
kin's question, call attention to the fact that he took 
the lease in his own name and not in the name of 
Paramount? 

A. I knew nothing of the lease, sir. 

Q. You know it now ? 

A. I know it now, yes. 



180 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. Did Paramount take out some insurance for 
him of any kind'? 

A. What type of insurance? 

Q. Of any kind? Liability insurance? 

A, We have a broker in Oakland that writes in- 
surance for our office there and all of our business. 

Q* Do you know how that insurance was writ- 
ten! A. Yes. [95] 

Q. How was it written? 

A, Paramount Pest Control Service, doing busi- 
ness as Brewer, I think. 

. Q. Wasn't it written Charles Brewer, doing 
business as Paramount Pest Control Service? 
:;,A. Maybe. I don't know. I never did see the 
policy, sir. 

f Q. Will you be as definite as you can, so we can. 
cut the examination short? When and where was 
the first discussion had by you and Brewer, accord- 
ing to you, as to the change in the terms of this 
contract? 

A. You mean the change of payment? 

Q. Yes. A. September 12th. 

Q. You say that took place in Portland? 

A. Yes, in Portland, in Mr. Brewer's home. 

Q, Brewer assigned as a reason for that change, 
what? 

A. Mr. Brewer wanted to have an expansion of 
business, a program of putting on business, and 
the reason he assigned was this, that he had only 



vs. Charles P. Brewer, et al. 181 

(Testimony of Theodore C. Sibert.) 
taken so much money home, and asked me if I would 
go with him and help to finance the new business so 
that we could all profit thereof, and our agreement 
was: I said, " Charlie, I am not a big man, a big 
bad man, trying to take advantage of anybody. If 
you want to live cheap at home, I will take that 
same amount, up to that period of time, so that -we 
can put this business on." [96] 

Q. He thought he could make more money und^r 
that arrangement, didn't he, in the future? 

A. Yes. 

Q. You agreed to that? 

A. I agreed for a change of payment, dollar-for- 
dollar payment. When Charlie would take a dol- 
lar home or if he took $5 to live on, that is all I 
would take, and spend the rest in the expansion or 
building up new business. 

Q. That was the agreement you made which you 
say you forgot to mention to the other men until 
December? A. That is right. 

Q. When was the next time that any question 
arose between you and Brewer as to the times of 
payment under this contract? 

A. I didn't know there was a question, sir. 

Q. When was it ever discussed between you 
after that, between Brewer and you, or you and 
Hilts? 

A. We had a talk about that on the trip, June 
17th. 



182 Paramount Pest Control Service 

(Testimony of Theodore C. Sibert.) 

Q. How about this arrangement in March when 
this letter was written? 

A. I didn't talk with Brewer. We just tried 
to show him the expenses that would be charged to 
him — it looked like there was going to be a charge 
to this district, and we wanted to show Mr. Brewer 
that we was still going the other mile. 

Q. Do I understand, then, that this arrangement 
that, was made in March was agreed upon by you 
and Hilts? [97] 

A. It was. And he said in March, that was the 
first time it was exactly clear to him, and he thought 
it was a fine way to treat a company and a fellow in 
the field, and that was his idea. Hilts says, "Why 
don't you help Charlie," he said, "on this Eastern 
Oregon deal?" and I just consented; that is all. 

Q. That was done without any previous commu- 
nication between you and Brewer, is that a fact? 

A. Myself and Brewer, yes. 

Q. Do you know whether Hilts had talked with 
Brewer about it? 

A. I didn't know. 1 wasn't bore. I don't know. 

Q. Did Hilts tell you whether he had or not? 

A. He said Charlie had mentioned it to him. 

Q. What did he say that Charlie had said? 

A. Mr. Hilts is the auditor and he must have 
talked to Charlie about it to get, you know T , a cor- 
rect understanding of it, and he said Charlie merely 
mentioned it to him. 



vs. Cliarles P. Brewer, et al. 183 

(Testimony of Theodore C. Sibert.) 

Q. Did he tell you Charlie had objected when 
Hilts had presented a statement based on a 20-80 
per cent beginning the first of January*? 

A. He did not. 

Q. You say the first time you and Brewer had 
the matter up was in June? 

A. The first time Mr. Brewer and I ever talked 
about anything like that except that one time was 
in June. 

Q. You want the Court to understand that, al- 
though Mr. Brewer [98] had requested this change 
in 1946, although you and Hilts had agreed to con- 
tinue the change in March, 1947, to help Brewer 
out, that Brewer told you, between the 17th and 
20th days of June, that he wanted to come back on 
the 20-80 basis because he would make more money 
that way? A. I do. 

Q. You never had any idea to the contrary, 
that there was any trouble, until you received this 
letter which was written on July 25th? 

A. I had no idea. I thought we were the best of 
friends and things were going to continue. 

Q. Then, the letter of March 15th that Hilts 
sent out, that letter was sent by Hilts after his 
conversation with you, wasn't it? 

A. It was, in the Oakland office. 

Mr. Bernard : That is all. 

Mr. Rankin: You are excused, Mr. Sibert. 

(Witness excused.) [99] 



184 Paramount Pest Control Service 

E. W. BUSHING 

was thereupon produced as a witness on behalf of 
plaintiff and, being first duly sworn, was examined 
and testified as follows: 

Direct Examination 
By Mr. Rankin : 

Q. Give your name to the Court. 

A. E. W. Bushing. 

Q. Where do you live, Mr. Bushing? 

A. 1325 San Francisco Street, Vallejo, Cali- 
fornia. 

Q. What is your occupation? 

A. I am an entomologist. 

Q. How long have you been such? 

A. I graduated from the University of Hlinois in 
1942, with a degree from the School of Liberal Arts 
and Sciences — majored in entomology. 

From that date until September I worked for the 
Dupont Experimental Station in Newark, Delaware, 
as entomologist, not for Dupont but for the Dela- 
ware Agricultural Experiment Station. 

Q. Have } r ou had practical experience in the 
field? 

A. Yes. After working three months for that 
station in the practical application of insecticides, 
I went into the service for three years and a half. 

Q. What did you do in the service? 

A. Acted as entomologist in the service, in the 
United States for three years, spent three months in 
the Hawaiian Islands, and [100] all the time I was 
in the hospital, in the service. 



vs. Charles P. Brewer, et al. 185 

(Testimony of E. W. Bushing.) 

Q. The hospital service*? 

A. I was in the hospital, in the service. 

Q. Oh, in the service? A. Yes. 

Q. Did you work in the Dupont Experimental 
Station and in the Army, when you were not in the 
hospital — Was it related to your work as an en- 
tomologist ? 

A. Yes, it was. I was one of the fortunate indi- 
viduals who went through the service in the bracket 
in which he had been trained at the university. My 
training in the university helped me in this respect 
in the service. I was responsible — If any of you are 
familiar with Army procedure, a sanitary officer 
is detailed on the basis of ten thousand personnel, 
and charged with the responsibility of the complete 
routine of rodent and insect control, in addition to 
other duties, and I was detailed on that basis here 
in the United States, and at Hickham Field, Ha- 
waii, I was Chief Quarantine Officer on all incom- 
ing ships from the Orient. 

Q. Have you worked with the Paramount Pest 
Control Service? 

A. I am in their employ in July, 1946. 

Q. Are you still in their employ? A. lam. 

Q. As an entomologist, do you have anything to 
do with rodent control ? [101] 

A. Yes. 

Q. The experience that you have described, does 
that relate to rodents as well as insects ? 

A. Yes. 



186 Paramount Pest Control Service 

(Testimony of E. W. Bushing.) 

Q. In the Paramount Pest Control Service, do 
you have anything to do with the matter of poisons? 
A. Yes, I am directly responsible for the formu- 
lation of all Paramount 's formulas. 

Q. Do you have anything to do in that service in 
connection with pests, insects or rodents ? 

A. Yes, from the standpoint of issuing explana- 
tions to all the personnel as to the uses of all these 
formulations. 

Q. Do you have anything to do with the applica- 
tion, the means of bringing these poisons and these 
pests together ¥ 

A. Yes. We endeavor to supply our personnel 
with the best available equipment, going even as far 
as first experimenting and testing it there in the Oak- 
land office before submitting it to them for their use. 
Q. In the Paramount Pest Control Service, do 
you come in contact with any of the field operators 
or the men who are doing the practical work of con- 
trolling pests ! 

A. Yes, I do. I am at their service at any time 
that they so wish, in order to assist them at any time 
in their work, regardless of what their problems 
might be ; they not being able to solve it, I would be 
more than willing to come out and travel [102] in the 
case of Portland or Seattle or whatever it might be 
to solve these problems for them, even to the extent 
that I would personally help them out with these 
problems. 

Q. I would like to hand you the exhibits relating 
to poisons that have been identified by the president 



vs. Charles P. Brewer, et al. 187 

(Testimony of E. W. Bushing.) 

of the corporation, enumerated No. 5-1 to No. 5-26, 
and ask you to refer to them. You are familiar with 
those, are you not? A. Yes, I am. 

Q. You have seen them in this form as they are 
presented here, before? A. Yes, I have. 

Q. Mr. Bushing, it is the contention of these de- 
fendants that there is nothing unique about these 
poisons, that you can go out and buy them on the 
common market anyplace. 

Will you take these exhibits, No. 5-1 to No. 5-26 
and explain them. Explain what there is about them 
that this court should know in connection with the 
contentions made by the defendants. Eefer to Ex- 
hibit 5-1, if you will, please. 

A. 5-1, Paramount Ant Syrup. 

Q. Is that on the common market? 

A. There are many ant syrups on the market, 
yes, but not the Paramount Ant Syrup. 

Q, What do you mean by that ? 

A. We have in the Paramount Ant Syrup incor- 
porated an unusual inert ingredient. On the label we 
do not have to state what [103] those are, specifically. 
All that is necessary to state on the label is what the 
active ingredients are, those poisons which are de- 
fined in connection with the registration of economic 
poisons in the State of California. 

As I have previously mentioned, there are others 
on the market, but we have incorporated into the 
inert portion of the product an ingredient which has 
made this more attractive, in our estimation, to ants. 



188 Paramount Pest Control Service 

(Testimony of E. W. Bushing.) 

Q. In what particulars is it made attractive, 
more attractive? 

A. We believe it is more attractive because, if 
the other syrups could be placed side by side, we 
think we have found through experience that they 
will prefer to accept ours. 

Q. Just to clarify one thing: Those labels seem 
to be divided generally into inert and active ingre- 
dients. A. Yes, sir. 

Q. Active ingredients are what? 

A. Those ingredients which are required to be 
specified on the label. They include those ingredients 
found in the list of economic poisons registered by 
the State of California. 

Q. Inert ingredients are what? 

A. Inert ingredients are only that part of the 
formula which may be either necessary to complete 
that formula or — When I say that it is necessary 
for them to be in there to complete the formula, I 
mean without that chemical existing in the inert 
ingredient, the ultimate product could never be 
gotten. [104] 

Q. The next one, 5-2, what is that by name ? 

A. No. 5-2 is Paramount Bed Bug Spray. 

Q. Is that on the common market? 

A. No. Paramount Bed Bug Spray is not on the 
common market. 

Q. Is there anything unique about this Para- 
mount preparation? 

A. This is a product in which we have incorpor- 
ated a highly volatile solvent. The primary reason 
for this highly volatile solvent being present is that 



vs. Charles P. Brewer, et al. 189 

(Testimony of E. W. Bushing.) 

in spraying furs, clothes closets, et cetera, the high 

volatility permits very little damage to the fabrics. 

Q. Take the next, 5-3. 

A. Paramount Bed Bug Spray F2. 

Q. Is that on the common market? 

A. No, Paramount Bed Bug Spray F2 is not on 
the common market. 

Q. There is bedbug spray that is on the common 
market? 

A. There is, yes. 

Q. How does this vary from the common market 
variety ? 

A. In this formulation we have developed a DDT 
percentage which, in our spray, does not leave un- 
desirable residue as, for example, upon such things 
as furs, rugs, et cetera. I feel that this is a decided 
advantage. One of the larger railroads, for instance, 
objected to there being too much of a powdery 
residual on the fabrics from the use of excessive 
DDT. 

Q. What is the next one? 

A. Paramount DDT Barn Spray, F2. [105] 

Q. Is that on the common market? 

A. Yes, that is on the common market. 

Q. Is that registered by Paramount? 

A. We have registered that Paramount formu- 
lation because, included in the formula are the direc- 
tions. Without directions the formula is no good. 
By that I mean, the r^aw substance has to be included 
with the application and proper directions are neces- 
sary. 



190 Paramount Pest Control Service 

(Testimony of E. W. Bushing.) 

Q. What is the next number*? 

A. Fly spray F2. 

Q. What is the exhibit number? 

A. This is No. 5-5. 

Q. Is that on the common market ? 

A. No, that is not. Paramount Fly Spray F2 is 
not on the common market. 

Q. What is unique about that? 

A. We have in this product, from our experience, 
added an increased amount of a particular solvent. 
That solvent is included in the active ingredients. 
Any material that will aid in the destruction of in- 
sects must be included in the active ingredients. That 
solvent aids in the dispersal of the DDT to the ex- 
tent that this product differs greatly from others if 
for no other reason than the results. 

Q. Just for the moment, this thought occurs to 
me : Suppose you had an active ingredient or suppose 
you had a formula that contained [106] elements A, 
B, C, and D, and you mixed them in that order ; sup- 
pose, for the purpose of insecticide or rodent con- 
trol, you mixed them A, D, C and B; would you 
have the same result? 

A. No, you would not. If you would like, I can 
bring one of those 

Q. Does that appear later ? 

A. Yes, it does. 

Q. Bear that in mind and call it to our attention 
when you come to it. Take No. 5-6, what is the 
name of that ? 

A. Paramount Fungus Solution. 



vs. CJiarles P. Brewer, et al. 191 

(Testimony of E. W. Bushing.) 

Q. Is that on the common market? 

A. No, this particular product, Mr. Rankin, is 
not on the common market. 

Q. Is it unique ? 

A. It is unique from the standpoint that there are 
very few, if any, people, individuals, who are ac- 
quainted with fungus. Consequently, there is no 
market demand for fungus solutions. Fungicides 
must be prepared according to the individual fungus. 
They cannot promiscuously be made to satisfy a 
general requirement. This particular product is 
used upon identification of a specific fungus. 

Q. How is that fungus identified 1 ? 

A. The fungi are identified under microscopic 
examination only. There is no prescribed examina- 
tion that is adequate. To get down to a little more de- 
tail, the actual spores in the fungus [107] growth are 
identified, 

Q. That is, on]y by laboratory facilities could you 
make a proper analysis of a fungus ? 

A. You may be able to make it only to the extent 
of a generalized classification ; you could not, to the 
extent of a complete identification. 

Q. Take No. 5-7, what is the name of that? 

A. Paramount Insect Powder. 

Q. Is that on the common market? 

A. No, Paramount Insect Powder is not on the 
common market. 

Q. Is there anything comparable to it on the 
common market? 

A. There is a product on the market, namely, 
sodium fluoride, which is an accepted roach powder. 



192 Paramount Pest Control Service 

(Testimony of E. W. Bushing.) 

Q. Anything unique about this, in differentia- 
tion from the one you mentioned? 

A. Through our long experiments in the business, 
over a period of years, we have acquired from vari- 
ous chemical houses, the possibility of securing an 
unusual product from this standpoint : In the manu- 
facture of pyrethrins, which is incorporated in this 
formula, there is, falling off from the mill that 
grinds up a flower from Japan, a dust similar to 
what you have when you make coffee. That dust falls 
off and is collected and sold. However, that dust, 
being in such limited quantities, is only sold to those 
individuals or some concern with a priority, we will 
say, a priority that you get through long dealings. 
Consequently, [108] you have here 1.45 per cent pyr- 
ethrins. The usual percentage of pyrethrins on the 
market, instead of being 1.45 per cent, is only .9 per 
cent, so that almost again as much pyrethrin is ac- 
tually contained in this product, and the results are 
double and the efficiency is tremendous. 

Q. Has it a lethal quality or not? 

A. It is highly lethal, a highly lethal quality, 
from the standpoint of an active ingredient. That is 
why we have incorporated pyrethrins into this pro- 
duct. Sodium fluoride in itself, as I just said a while 
ago, is an accepted roach powder. I do not deny that 
or that you can find sodium fluoride on the market 
anywhere. I am not contending that at all but, just 
as in coffee, there are those that are excellent and 
those that are very poor. An insecticide is no 
different. 



vs. Charles P. Brewer, et al. 193 

(Testimony of E. W. Bushing.) 

Q. The next exhibit, No. 5-8. 

A. Paramount Insect Spray. 

Q. Is that on the common market? 

A. No, Paramount Insect Spray is not on the 
common market. 

Q. What is unique about that? 

A. That is one of those products I was referring 
to a minute ago, where you can mix it A, B, C 
and D 

Q. Please tell the court about it. 

A. First of all, this is an exclusive formulation 
of ours. There is no other formulation like it avail- 
able on the market. 

In respect to this particular formulation, we had 
used [109] this for several years. During this last 
summer, in Mr. Brewer's territory, as well as in 
Washington and in our home state, we used this 
particular product exclusively. 

For economic reasons we decided to give one of the 
very reputable oil companies in this state, here in 
Washington, and all over the United States, the op- 
portunity of supplying us with a product that they 
claimed was comparable. This product is five per 
cent DDT, plus the necessary ingredients which are 
lethane, pyrethrin, plus carbon tetrachloride, plus a 
petroleum base. 

They came to us and, naturally, from the stand- 
point of economy, we are interested in having this 
supplied to us, so for three months, June, July and 
August, we used this product. 



194 Paramount Pest Control Service 

(Testimony of E. W. Bushing.) 

After three months' time we had so many com- 
plaints; in fact, we even had cancellations of con- 
tracts due to this product that this extremely large 
oil concern was putting on the market as being com- 
parable ; in fact, they were to such an extent that we 
pulled back their product from use and substituted 
our own. 

Now, at the time that this occured, this large oil 
firm was naturally interested in knowing why. Con- 
sequently, they came to us and asked for samples of 
our product to take them to their laboratory. Their 
explanation as to why ours is better need not be 
brought in here, except to this extent, that it was 
proven better. When we put them back in our serv- 
ice again, it completely eliminated all the complaints 
that we had [110] had. 

Q. Take No. 5-9. What is the name of that? 

The Court: How many are there? Twenty-six? 

Mr. Rankin : There are twenty-six. 

The Court: Don't go through every one of them. 

Q. (By Mr. Rankin) : Will you pick out some 
exceptional ones that you claim to be particularly 
unique and particularly lethal? 

A. I have some here I would like to bring 
out 



Q. What is the first one, the exhibit number? 

A. Exhibit No. 5-20, sodium fluoroacetate tech- 
nical. 

Q. Is it on the common market? 

A. Not by any means, no. Sodium fluoroacetate 
is known to the general public as Compound 1080. 



vs. Charles P. Bretver, et al. 195 

(Testimony of E. W. Bushing.) 

This product is by no means available on the local 
market. It is not sold on the local market because 
the Monsanto Chemical Company, which manufac- 
tures and sells Compound 1080, sees to it that the 
companies that do buy it have a designated amount 
of insurance, namely forty and eighty. You must 
supply a certificate that you have that amount of in- 
surance coverage. We have insurance coverage of 
not only that but one hundred thousand to two 
hundred thousand coverage. 

It is unique in this respect: It is an extremely 
lethal poison. There is no antidote. In addition to 
the fact that there is no known antidote, it is usually 
sold only to those commercial companies that have 
satisfied these requirements. 

Now, in attempting to use sodium fluoroacetate 
technical, [111] there has been much dissension from 
the public about its extreme potentialities. Never- 
theless, it has a place in this industry and will con- 
tinues to be used. 

For the information of the Court, the Wild Life 
Service is one that is doing excellent work in fur- 
thering and advancing this product. One of my 
personal friends is in the Wild Life Service and 
has done much of that work. 

Q. Do you know how many firms or companies 
are qualified to secure this? 

A. I don't know offhand. 

Q. What is the other product that you have 
there ? 



196 Paramount Pest Control Service 

(Testimony of E. W. Bushing.) 

A. I would like to bring this particular product 
up, primarily because I believe it shows what the 
secret is about the manufacture of formulas. In fact, 
I believe it is one example, even though it is more 
prominent, you might say, than others. 

That is Paramount 's 'Termite and Fungus Mix- 
ture, Exhibit 5-21. In the Termite and Fungus Mix- 
ture, there are at least six registered economic 
poisons, at least six. However, going into this formu- 
lation, there are at least eight. Immediately one be- 
gins to wonder, "Why aren't those two registered?" 
Those are the inert portions and, in the finished 
formulation, there is no trace. 

I mean, in this respect, which our counsel was 
attempting to bring out : When you mix A, B, C and 
D, for instance, in this formulation, that is one thing. 
If you were to mix A, C, D [112] and B, it does not 
mean that you get the same results. The additional 
ingredients in here are caustic soda and sulphuric 
acid. Should this formulation fall into the hands of 
some other individual, it would be totally impossible 
for him to totally remix the formulation, because in 
it there is no indication that there is caustic soda and 
sulphuric acid so, consequently, if he made the at- 
tempt, taking what was available on the label, the 
product would by no means compare in efficiency or, 
in fact, do the job that it was originally intended for. 

Q. That is sufficient on the matter of poisons. 
About the pests, are you familiar with the various 
pests sought to be controlled by this service? 



vs. Charles P. Brewer, et al. 197 

(Testimony of E. W. Bushing.) 

A. There are continually developing in this field 
additional pests beyond those that were originally 
fought. By that I mean that has mostly come about 
as a result of the last war. 

Those pests that we are concerned with are re- 
ferred to in California as structural pests. Those 
pests are those most commonly found in homes, 
warehouses, theaters and so forth, and would in- 
clude such things as bedbugs, ants, fleas, ticks, 
rodents, rats and mice, such things as those which 
are referred to in the structural business, — referred 
to as structural pests, I should say. 

Q. Are there any that are becoming unusual or 
new in the field ? 

A. Yes. We have many forms of bedbugs being 
introduced into this country from the Orient. Of 
course, when one says "bedbugs," [113] the natural 
opinion is that they can be controlled by some pro- 
duct that we had before. That is not so by any means. 
Our specific pest, not just " bedbug" but by its Latin- 
ized name must be controlled by, we will say, a Latin- 
ized formula. 

Q. Does it require any knowledge, any classifica- 
tion of a particular pest in order to most effective 
determine its control? 

A. Oh, yes. One of the best examples I can think 
of offhand is what is known as the common fruit fly. 
Unless you identify is specifically, as to the exact 
species, you can spray until you are blue in the face 
and you won't control them. By that I mean that 
Chlordane is the accepted control for one species of 



198 Paramount Pest Control Service 

(Testimony of E. W. Bushing.) 

this fruit fly, and DDT as the control for another 
one. For instance, if you use DDT on one to control 
it and use DDT on the other, you are not going to 
have any results at all. 

Q. Coming to the third classification, or the ap- 
plication of poisons to the pests, is there anything 
that is required, any particular knowledge or train- 
ing in regard to that? 

A. Before the war it was assumed that one mate- 
rial, for instance, could be made and accepted for the 
control of all pests. That was the assumed theory 
and it was one that was practiced extensively. 

After the war, with new ideas on organic chemi- 
cals, it was found, instead of having one product that 
a man was going to do this with he had to have twelve 
products to control twelve different insects, not that 
some of these products would not be [114] controlled 
to a minor degree. Wherever he had a job, it was 
suggested to this customer that it was efficient that 
he use only that compound specifically developed for 
that insect and that insect only. 

If you would like for me to just give you an ex- 
ample : Chlordane is one of the latest products on the 
market. That product was put on the market just 
about, at least, two years ago and was slow in being 
used. When it first came out, it was thought it 
would be available to do a lot of things and was going 
to replace DDT, and was good for everything. In 
my estimation, Chlordane is good for only three 
insects and DDT for approximately two. 



vs. Charles P. Brewer, et al. 199 

(Testimony of E. W. Bushing.) 

The Court: What do you mean, " approximately 
two"? 

A. It is used against many others with incom- 
plete results, as you get if you use another product. 

Q. (By Mr. Rankin) : In the application of the 
poison to the insect, is there such a differentiation 
as killing an insect, in one instance, or having it 
spread, continue to spread to other insects or 
rodents'? Is there such a differentiation? 

A. You are speaking about the chemical now? 

Q. Yes. 

A. If I understand, you are. This i§ my explana- 
tion 

Q. Yes. 

A. In spraying for control of various pests DDT 
is known not as an agent that kills upon mass disper- 
sal but as an agent that [115] kills after it has been 
deposited upon a wall, for instance. The ordinary 
housewife, when she gets one of these bottles that has 
a 5-per cent DDT, returns home and disperses it 
around the room, but in using DDT it is essential, 
as it is w T ith other products, to put the material 
exactly where you want it to do the job and nowhere 
else, not in midair where it can be of no value. 

Q. Did you describe what you do, if anything, in 
the matter of training people to go in the field? 

A. No. 

Q. Will you give a brief explanation to the Court 
of what you do in that regard ? 

A. We have attempted, to the best of our ability, 
to train all of our personnel, either through direct 



200 Paramount Pest Control Service 

(Testimony of E. W. Bushing.) 

contact, my direct contact with them, or through the 

dissemination of information by letter, folder, et 

cetera. 

We have gone beyond that. We have requested 
them to collect any specimens they were confronted 
with that they didn't know about and forward them 
back to me, thinking that perhaps maybe they would 
collect something that they had never heard about 
and would be interested in knowing something about 
it. We have encouraged this tremendously. We have 
informed them as to the best technique of collecting 
these specimens and forwarding them to the Oakland 
office, making it plain to them that nothing could be 
forwarded alive through the mails [116] 

That is a Federal regulation. 

Now, to encourage them more to forward in their 
specimens was always at the tip of my tongue when 
I was out because the unfortunate thing that I was 
confronted with was that the average individual 
out in the field, while he could describe it partially, 
he could not describe it completely enough so I could 
recommend control measures. That was the reason 
for the specimens and that was the reason for dis- 
seminating this information that kept them abreast 
of all current changes in chemicals, as much as 
possible. 

In particular, this fact: We don't want them nec- 
essarily to have information about a chemical in a 
scanty way only. One could do more harm by get- 
ting limited information about chemicals than you 
can do good. After all, it was up to us in the Oak- 



vs. Cliarles P. Brewer, et al. 201 

(Testimony of E. W. Bushing.) 

land office, and my department in particular, to 
choose those materials that would be used and those 
that would be used only in the control of each spe- 
cific pest. 

Q. To bring this down to the present situation, 
did Mr. Brewer himself ever make any application 
to you for information? 

A. Yes, he received his training during the lat- 
ter end — I can't give you the exact date. It must 
have been during the summer, but I received a let- 
ter in which he asked me 

Q. Was he still in the employ of Paramount? 

A. Yes, he was. a letter in which he asked 

me to identify [117] 

Mr. Bernard: I think the letter would be the 
best evidence. A. Pardon? 

Mr. Bernard: I am making an objection. 

The Court: Do you have the letter? 

Mr. Rankin : I do not believe we have it. 

Q. Just state in general terms what the inquiry 
was, if you will, and w 7 hat you did in connection 
with it. 

Mr. Bernard: I renew the objection. 

The Court : He does not have the letter, he says. 

Q. (By Mr. Rankin) : Where is the letter, Mr. 
Bushing? 

A. I have it in my folder in the hotel room. 

Mr. Rankin : All right, I will call you back later. 
You may cross-examine. We will be able to produce 
the letter later. 



202 Paramount Pest Control Service 

(Testimony of E. W. Bushing.) 

( !ross-Examination 
By Mr. Bernard: 

Q. When did you first meet Mr. Brewer? 

A. That date I don't remember exactly, sir. I 
would say roughly a year ago. 

Q. How often did you meet him during the year \ 

A. I met Mr. Brewer only when he came down to 
the Oakland office. 

Q. Once \ A. At least once. yes. 

Q. Where did you meet him at that time? 

A. In the office ; in the Oakland office. 

Q. Did you give him any technical information 
at that time? [118] 

A. None was asked, sir. 

Q. Now, as I have followed your testimony, up 
to the time you got to Exhibit 5-8 — Will you take 
those exhibits ? A. Yes, I will. 

Q. You say that Paramount products were bet- 
ter or you thought they were better than similar 
products that could be bought on the market, is that 
correcl ' A. I did. 

Q. From No. 5-8. will you run through and tell 
us what exhibits indicate products where similar 
products could be bought on the market \ 

A. Do you happen to know what 5-8 was \ 

Q. 5-8. A. I have it. 

Q. Paramount Insect Spray. 

A. You wish me to go from there on? 

Q. Yes, and give me the exhibit numbers of any 
products of the Paramount Pest Control Service 



vs. Charles P. Bretver, et al. 208 

(Testimony of E. W. Bushing.) 

where similar products could be bought upon the 

public market. 

A. I could answer that for you by going through 
them, item by item, and naming the active ingredi- 
ents of part of it and tell the material that is avail- 
able on the local market. That product alone is not, 
by a long shot, a means of controlling this insect 
necessarily 

Q. Well, there are similar products selling on 
the public market, [119] where a person can buy 
them, or can buy the same thing as Paramount 's 
products ? 

A. I wouldn't say the same thing, no. 

Q. What do you mean by that'? 

A. The reason I say I wouldn't say the same 
thing is because many of these products are not on 
the market at all. I can name one in particular. 

Q. That is what I am asking you. You say 5-8' 
was not on the market at all. I want to find out 
what other exhibit numbers refer to similar products 
that can be bought on the open market. 

A. Paramount Moth Spray, Exhibit 5-11, cannot 
be purchased on the market. 

Q. No. 9 is moth spray? 

Mr. Eankin: No, 5-11. A. 5-11, yes. 

Q. (By Mr. Bernard) : Are there moth sprays 
on the public market? 

A. There are moth sprays on the public market. 
There is no Paramount Moth Spray on the public 
market. 



204 Parcunount Pest Control Service 

(Testimony of E. W. Bushing.) 

Q. Go ahead and tell me what other exhibit num- 
bers indicate products A. 5-14. 

Q. Exhibit 5-14 is what? 

A. Paramount Poison Grain. 

Q. Can poison grain be bought on the market ? 

A. That can be bought on the public market. 

Q. Yes. I asked you to run through the list of 
exhibits there. A. 5-19. 

Q. What is 5-19? A. Sodium fluoride. 

Q. Can sodium fluoride be bought on the public 
market ? 

A. Yes. That is a basic material for all of those. 

Q. Go ahead. 

A. I believe that is all. 

Mr, Bernard: That is all- 
Redirect Examination 
By Mr. Rankin: 

Q. In the application of these poisons to the in- 
sects, T forgot to inquire of you on direct examina- 
tion whether or not there is more to the application 
of the poisons than just giving them to the insects'? 
Are there other interests to be considered? Do I 
make myself clear? A. No, sir. 

Q. How about furniture, children, and the other 
things that poisons might affect, which are not in- 
tended to relate to them? Do you have to guard 
against that? A. Yes, we do. 

Q. In making the application of the poisons, do 
you have to consider whether or not they would be 
dangerous to human life, health and property? 



vs. Charles P. Brewer, et al. 205 

(Testimony of E. W. Bushing.) 

A. Yes, we do. No one in the State of California 
can label [121] a product without it being first ap- 
proved by the Bureau of Chemistry and, before they 
will approve it, these directions must be to their 
liking. 

Q. Do you ever have any difficulty with the 
chemical department, or whatever department that 
is of the State of California which governs poisons 
in connection with getting any particular product 
that you want to use in your business? 

A. Yes. Due to the extreme lethal qualities of 
sodium fluoro-acetate, their preference was that we 
handle the technical product by reducing — we knew 
and realized that there must be a dilution. And, 
after all, it must be broken down into minor dilu- 
tions to do the job that we wanted it to do. 

To make sure we had a formulation that would 
be acceptable to them, we discussed and talked con- 
tinually with them about a dilution of the formula- 
tion. This dilution of the formulation having been 
worked out, was accepted by them and we secured 
registration and, by the way, there are very few 
concerns in the State of California that have a reg- 
istration for sodium fluoroacetate. 

Mr. Rankin: If there is nothing from counsel, 
we will excuse you while you get that letter. Let me 
know, when you return. 

Recross-Examinati on 
By Mr. Bernard: 

Q. You have testified about the application of 
these poisons. I believe you testified that, with one 



206 Paramount Pest Control Service 

(Testimony of E. W. Bushing.) 

or two or three exceptions, [122] there are similar 
products on the market to those indicated by the 
Paramount label, although you claim that Para- 
mount products are superior. 

When you buy those other products on the public 
markets, of course, directions are given as to how 
they are to be applied, and so on ? 

A. Yes, directions are given.. 

Q. For instance, when you say there are many 
ant syrups A. Yes. 

Q. If a man buys ant syrup on the market, of 
course, he gets directions as to how to apply it? 

A. Yes. 

Q. That is quite universal in these various con- 
coctions for the control of rodents and insects, is 
it not? 

A. It is more so in that specific instance you in- 
dicated than in rodent control. There is one large 
manufacturer of rodent grain outside of ourselves. 

Q. In testifying about Exhibit 5-8, you men- 
tioned a prominent oil concern. That is the Shell 
Oil Company? A. Yes, it is. 

Q. Do they still put out an insect spray? 

A. They don't call it an insect spray. 

Q. What do they call it? 

A, 5-per cent DDT, I believe, the present name 
is. Yes. 

Q. It is supposed to be an insect spray? [123] 

A. No, the spray is given that name by a com- 
mercial company. 

Mr. Bernard: That is all. 



vs. Charles P. Brewer, et al. 207 

(Testimony of E. W. Bushing.) 

Eedirect Examination 
By Mr. Rankin : 

Q. Is there any one of these poisons here listed 
in these exhibits where the combination is not even 
known about? A. On these labels? 

Q. Yes. 

A. You mean the composition of them? 

Q. Just held by Mr. Fisher and Mr. Sibert? 

A. No, there isn't any. 

Q. As far as you know ? A. That is right. 

Mr. Rankin: I think that is all. You may get 
that letter and then we will continue with the exam- 
ination later on. 

(Witness excused.) [124] 

HAROLD W. HILTS 

was thereupon produced as a witness on behalf of 
plaintiff and, being first duly sworn, was examined 
and testified as follows: 

Direct Examination 
By Mr. Rankin : 

Q. State your name to the Court? 

A. Harold W. Hilts. 

Q. Where do you live? 

A. I live at 4131 Randolph Avenue, Oakland, 
California. 

Q. What is your business? 

A. Extermination. 

Q. With whom are you connected? 

A. Paramount Pest Control Service. 



208 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. Have you any particular department in that 
service ? 

A. Yes, auditing department. 

Q. Are you also familiar to some extent with the 
matter of pest control? A. Yes, sir. 

Q. When did you first come with this company? 

A. About May, 1940. 

Q. Was it then a partnership ? 

A. Yes, sir, it was a partnership. 

Q. Who were the partners'? 

A. Mr. T. C. Sibert and Mr. G. H. Fisher. 

Q. Have you continuously remained with the 
pest control service [125] that they have conducted 
since that time? A. Yes, I have. 

Q. When did you first meet Mr. Brewer. 

A. Some time in February of 1946. 

Q. Like Mr. Sibert, had you been a fast friend 
of his, or an intimate friend ? 

A. No, sir, I hadn't. 

Q. Did you ever meet him or have any connec- 
tion with him, particularly prior to the time he 
came with this service ? A. No, sir. 

Q. What did you do to assist Brewer in becom- 
ing established, if anything? 

A. I brought Mr. Brewer to Portland in May or 
April, 1946, and assisted him in getting him familiar 
with the records and establishing his ways here so 
that he could carry on the business for the company. 

Q. Had you had anything to do with him while 
he was in this short training period there, from Feb- 
ruary to April, 1946, at Oakland, California? 



vs. Charles P. Brewer, et al. 209 

(Testimony of Harold W. Hilts.) 

A. No, sir, only just to pass the time of day with 
him. 

Q. Did you have any association with Mrs. 
Brewer? A. During that time? 

Q. Yes. A. No, sir. 

Q. After that time? [126] A. Yes, sir. 

Q. In what capacity? 

A. She was taking care of the books in the Port- 
land office after that time. 

Q. What can you say as to the system of the 
books as to whether it is required by the company 
or whether they are allowed to set up their own 
system ? 

A. The books are set up by the company, a spe- 
cific system of accounting is set up. I travel 
throughout all our territory and I assisted her in 
getting established along that line after she came 
to Oregon. 

Q. When you speak of all your territories, are 
they geographically bounded by natural state boun- 
daries or are they split up so that there are two in 
some states? 

A. They are split up into geographical boun- 
daries in the states and also as to state boundaries. 

Q. How many general agencies have you got of 
that nature? 

A. Geographically bounded in a state ? 

Q. Yes. A. Well 

Q. How many agencies altogether, if you remem- 
ber, Mr. Hilts? A. Eleven. 



210 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. How many of those can you say are bounded 
by state boundaries'? A. Just two. 

Q. Those two are what? [127] 

A. Washington and Oregon. 

Q. Were you familiar with the granting of the 
Oregon territory by Paramount Pest Control Serv- 
ice? A. I was. 

Q. To whom was it made? 

A. To Mr. Brewer. 

Q. Were you familiar with the signing of the 
franchise agreement, Exhibit 24, in this case as of 
July 1, 1946, between Paramount Pest Control Serv- 
ice and Mr. Brewer? A. Yes, I was. 

Q. After the execution of that franchise, to your 
knowledge did the parties continue performance 
under that agreement? A. Yes, sir. 

Q. When did you become aware that there was 
any change or difference in any phase of that, Mr. 
Hilts? 

A. Tn December, 1946. 

Q. How did you become aware of that? 

A. Mr. Sibert told me. 

Q. What was the change ? 

A. The change as w r as illustrated at that time 
I did not understand completely. 

Q. It related to what phase of it? 

A. Change of payment. 

Q. Was there any other phase or provision of 
that contract that was changed? [128] 

A. No, sir. 



vs. Charles P. Brewer, et al. 211 

(Testimony of Harold W. Hilts.) 

Q. What did you do with respect to accounting 
statements under this contract between July 1, 1946, 
and December 31, 1946? 

A. Did you say under the change? 

Q. No, under the contract itself? 

A. I was here first in October, the 13th, the 
first time that I was here under the agreement that 
had been entered into on July 1, 1946, and I had sub- 
mitted at that time, after going through the records 
and closing the books, a trial balance, a profit and 
loss statement and balance sheet, on the business 
entered on the records at that time. 

Q. On what basis did you submit that statement? 

A. The books are kept on a cash basis and the 
franchise, as it was called, the 20-80 agreement, was 
based on 20 per cent of the gross receipts. 

Q. Paid to whom ? 

A. Paid to the Paramount Pest Control Service 
in Oakland. 

Q. And the 80 per cent 

A. was left for Mr. Brewer to operate on 

and to take home for himself. 

Q. At the time you submitted the October state- 
ment, on what basis did you submit it? On the 
franchise basis or the 80-20? A. Yes. 

Q. Did you receive any resistance from Mr. 
Brewer in that regard ? [129] A. I did not. 

Q. Up to the time you learned of the different 
arrangement from Mr. Sibert, had you rendered 
other statements on the 80-20 per cent basis? 

A. Yes, sir. 



212 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. Had you received any resistance from Mr. 
Brewer'? A. No, sir. 

Q. The dollar-for-dollar arrangement, as it has 
been termed, expired when? 

A. December 31st, 1946. 

Q. When it came to the January and February 
statements, 1947, on what basis did you submit 
those ? 

A. I submitted those on the 20-80 per cent agree- 
ment that was in effect as of July 1, 1946. 

Q. Was that termed the franchise agreement? 

A. That was termed the franchise agreement. 

Q. When did you submit those? 

A. I took the figures off the books March 13th 
and had them in rough draft and had talked with 
Mr. Brewer relative to the business in general and 
showed him the figures, and then I took those figures 
back to Oakland with me and also a check accom- 
panying the total settlement for those two months 
of January and February to Oakland. 

At that time, in Oakland, I prepared or had pre- 
pared typewritten copies of my rough draft and 
mailed them back to [130] Mr. Brewer. 

Q. Did you, during the month of January, 1947, 
have any conference or talk with Mr. Brewer? 

A. Yes, sir. 

Q. When was that? 

A. Around January 20th. 

Q. Where was that? 

A. That was in Portland, Oregon, in our office in 
Portland, Oregon, the Portland office. 



vs. Charles P. Brewer, et al. 213 

(Testimony of Harold W. Hilts.) 

Q. What was the purport of that conversation? 

A. As I remember it, we discussed the various 
operations of the business and made comments as to 
how it was progressing, and the books were, of 
course, closed for December 31st, and I took the 
figures that I had to have to send back at that time, 
and any additional information, and then we dis- 
cussed the business as to how it was progressing, 
and then we probably brought up — As I recall, he 
mentioned something to me about having had an 
understanding relative to an adjustment as to the 
change of payment under the franchise. 

Q. Had you understood it then, at that time? 

A. I didn't. 

Q. What did you do then ? 

A. I told him I didn't understand exactly what 
it was and that it was not clear to me. 

Q. What did you do then? [131] 

A. I left after that time and went back to Oak- 
land. 

Q. What did you do at Oakland? 

A. Went through my regular course of duties. 

Q. What did you do with respect to the under- 
standing at the time? 

A. I couldn't do anything about it because the 
understanding that he had was with Mr. Sibert and 
Mr. Sibert was not available at that time and, so, I 
couldn't contact him. 

Q. Did you discuss it with Mr. Sibert when he 
was available? 

A. Not until March 15th of 1947. 



214 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. Was there anything else in this discussion of 
January 20th concerning Eastern Oregon? 

A. January 20, 1947? 

Q. 1947, yes. Mr. Sibert testified about that. I 
don't know whether it had been brought up with you 
or not? A. No, it had not been. 

Q. Then did you have any contact with Mr. 
Brewer during the month of February, 1947? 

A. I was not in Portland and I had not seen 
Mr. Brewer during February, 1947. 

Q. From your position as auditor in the Para- 
mount Pest Control Service, do you know whether 
or not Mr. Brewer made any payments on his fran- 
chise — and when I say " franchise," I am referring 
to the July 1, 1946, agreement — on the amount that 
he owed Paramount Pest Control Service? [132] 

A. Yes, sir, he did. He made payment February 
6 of 1947 in the amount of $250. 

Q. Did you enter that payment in your account? 

A. Yes, they were reported on his records. 

Q. Will you see if you can locate that in the file, 
the check which you describe as the February 6th 
payment? A. Yes, I have it here. 

Q. What is the exhibit number ? A. 30. 

Q. Is there anything on that check that discloses 
the breakdown, w T hat the payment was made for? 

A. Yes. In our system of accounting, we have 
what w r e call the voucher system. The original copy 
goes to whomever it is made in favor of and the 
duplicate is retained in the office, and the duplicate 



vs. Cliarles P. Brewer, et al. 215 

(Testimony of Harold W. Hilts.) 

is an exact copy of the original, because a carbon 

is necessary to put it on there. 

Mr. Rankin : May I ask you to hand that to the 
Court? 

The Court: I don't want to see it just now. 

Q. (By Mr. Rankin) : One copy you have ? 

A. Yes. 

Q. Do the original and copy both disclose the 
items of the February payment, as made ? 

A. The original must have disclosed it, but the 
original has a division, which is known as the check 
proper and the remittance advice part. The remit- 
tance advice is torn off when the party [133] in 
whose favor the check or voucher is made payable 
deposits it, and the only part that we have left here 
in evidence is the check part and the duplicate 
voucher part shows what was on the remittance ad- 
vice that has been torn off. It discloses "For fran- 
chise, $250.00." 

Q. What is the total of the check? 

A, $338.00. 

Q. What is the balance, the difference between 
the $338.00 and the $250.00? 

A. In this particular case it is $88.00. 

Q. What is it for, generally speaking? 

A. Well, it is for supplies for December, $28.87, 
auditing for December, $25.00, and billing state- 
ments, $34.13. 

Q. Did you make a request of Mr. Brewer for 
this payment? A. I did not. 



216 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. Did you make any designation as to what it 
should apply on? 

A. No, sir. He put that on there of his own 
free will. 

Q. When it comes to the designation "For fran- 
chise, $250.00," did you have anything to do with 
requiring that designation? 

A. I never did, no. 

Q. When was the next payment made by Mr. 
Brewer ? 

A. March 6, 1947. It is in the amount of $250.00 
and states "Apply on 1946 franchise/' 

Q. Was there any other item contained in that 
check except the franchise payment? [134] 

A. No, sir. 

Q. What you described as to the method of pay- 
ment, as to the original and duplicate, particularly 
with reference to the voucher, applies to this check 
as well as the other? A. Yes, it does. 

Q. Were there any payments made by Mr. 
Brewer on the January and February, 1947, fran- 
chise account? 

A. Yes, there was. There was a payment made 
to me on March 13th when I was in Portland, going 
through the records, making up the statements for 
January and February. That payment was in the 
amount of $494.25 which completed the total amount 
of his liability to us under the franchise contract 
for January and February. 



vs. Charles P. Brewer, et al. 217 

(Testimony of Harold W. Hilts.) 

Q. It is claimed, as you well know, by Mr. 
Brewer that these payments were all on account of 
the franchise, as modified, meaning the change of 
payment on the dollar-home and dollar-company. 

Was there anything in connection with those pay- 
ments which could have been reconciled with that 
dollar-for-dollar agreement? A. No, sir. 

Q. Is there anything in these payments that is 
reconcilable with the franchise provision of 80-20 
distribution ? 

A. Yes, there is. The duplicate part of the 
voucher here reads, " Franchise balance for Janu- 
ary and February," and then [135] it records the 
January and February franchise, $994.25, and 
"Paid, $500.00; balance, $494.25," and that was the 
exact amount of his remittance to me. 

Q. On what basis'? 

A. On the basis of the 20-80 per cent franchise 
contract for January and February. 

Q. Were any of those payments made by Mr. 
Brewer under any complaint or protest to you ? 

A. Absolutely none whatsoever. 

Q. When did you complete your review of the 
books, your investigation? 

A. You say when did I what? 

Q. When did you complete it? 

A. March 13, 1947. 

Q. The first two of these checks are in round 
figures, are they not? A. Yes. 



218 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. If I recall correctly? 

A. Yes, they are. One was $338.00 even and 
the other was $250.00 even. 

Q. With respect to the franchise payments, what 
were they? 

A. $250.00 was included "For franchise," but 
the next and second one was just for $250.00. 

Q. That left an odd amount for the third check? 

A. That is correct. [136] 

Q. How much was that odd payment to com- 
plete the total payment under the franchise for Jan- 
uary and February, 1947? A. $494.25. 

Q. You probably said, but I don't recall : When 
did you complete that examination? 

A. Of January and February ? 

Q. Yes, January and February. 

A. March 13th. 

Q. Then what did you do? 

A. I went back to Oakland. Mr. Brewer took me 
to the airport, and we had our usual — well, conver- 
sation that, "Oh, well, things are going along fine" 
and everybody was happy, and so on. He often 
drove me out to the airport and watched planes take 
off the ground. I remember that specifically. 

Q. Was there any complaint made by Mr. 
Brewer that you were not treating him correctly ? 

A. No, sir, not at all. 

Q. Was there any protest or objection on his 
part as to making the payments that he had previ- 
ously made or had made at that time? 

A. No, sir. His attitude was to the effect that 
he knew it was due and he was going to pay. 



vs. Charles P. Brewer, et al. 219 

(Testimony of Harold W. Hilts.) 

Q. Did he at that time indicate that he was 
under the belief that the dollar-home and dollar- 
company agreement of September 12th was still con- 
tinuing? [137] 

A. No, sir, he didn't. 

Q. When you arrived at these figures showing a 
total of $994.25 due under the franchise agreement 
for January and February, 1947, did }^ou go over 
that matter with Mr. Brewer ? A.I did. 

Q. When did you get the figures that you went 
over with him? 

A. The figures were on his books. I took them 
off the records of the office for January and Feb- 
ruary. They represented the figures that are used 
in figuring the terms of the contract, commonly 
known as the franchise. 

Q. Did he understand it as you went over it? 

A. He certainly did. 

Q. Who made the entries in the books from 
which you took them, if you know? 

A. , Mr. and Mrs. Brewer, mostly Mrs. Brewer. 

Q. Then, upon your return to Oakland, what did 
you do, upon your return to Oakland in March of 
1947? 

A. I went through my regular procedure, having 
made a rough draft, and prepared it to be mailed. 

Q. A rough draft of what? 

A. Of my examination of his records for Janu- 
ary and February, 1947, and then at that time I 
asked Mr. Sibert if he would clarify for me his 
agreement relative to his understanding with Mr. 



220 amount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Bre 'or the period starting July 1st, 1946, to 

Doc 31st, 1946. [138] 

Q. Did Mr. Siberl do so? 

A. Yes, Mr. Sibert did so. 

Q. You say you went through your regular pro- 
cedure of preparing your accounting. Did you mail 
to Brewer a copy of your accounting Tor January 
and Fel . 1947 ! A. Yes, sir, T did. 

Q. Ca tf whether or not there is in this 

file such an accounting, this tile of exhibits? 

A. Yes, there is. 
• Q. What is that exhibit? 

; A. Tt is not in this exhibit file. Pardon me. 
Yes, it is. I think I recognize it here. No, I don't. 
It is not here. 

Q. T hand you this second volume and ask you 
if you can locate it in there ? 

A. Yes, sir, T do. 

Q. What is the number ? 

A. It is No. 57. 

Q. Did you give Y 1 1 . Brewer credit in that ac- 
counting for the payment he had made by the check 
dated February 6, 1947. for $250.00? 

A. Credit was given to him on his books, and his 
book figures are recorded on here, yes. 

Q. Did you make an accounting for February, 
1947, also : A. Yes, sir. 

Q. Did you deliver both of these when the Janu- 
:tnd February [139] accounting was done? 

A. I was not here in February or January. 



vs. Charles P. Brewer, et al. 221 

(Testimony of Harold W. Hilts.) 

Q. Did you give him credit for the February 
payment of $250.00 on the franchise in your Feb- 
ruary statement? 

A. That was not recorded on the books because — 
Did you say in February ? 

Q. Yes. 

A. I am afraid I don't understand that question. 
Yes, the $250.00 payment that was made February 
6th is recorded and he is given credit for that on 
his statement. 

Q. Then, the balance of $494.25, was he also 
given credit for that? 

A. Yes, sir, he was. It is also a matter of record 
in his books. 

Q. Were those entered on his records as well as 
your own? A. Yes. 

Q. As relating to the amount of money due from 
Brewer to Paramount under the franchise of July 
1,1946? A. Yes, sir. 

Q. Did you do anything else in relation to pay- 
ments when you returned to Oakland in March, 
1947? A. Yes, sir, I did. 

Q. What did you do? 

A. After understanding the agreement with Mr. 
Sibert, the agreement that Mr. Sibert and Mr. 
Brewer had entered into, which was [140] up to 
and including December 31, 1946, T then took the 
figures that we had for effecting an accounting on a 
settlement and prepared — Mr. Sibert and I pre- 
pared the figures together so that it would be right, 



222 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 
which was based on the "You take a dollar and I 
take a dollar" basis, and then mailed it to Mr. 
Brewer in Portland. 

Q. Was there a letter of transmittal with that"? 

A. Yes, I wrote a letter along with that? 

Q. What is the date of that letter"? 

A, March 15, 1947. 

Q. What is the exhibit number so we will have 
it identified? 

A. I don 't have it here. 

The Court : Take a short recess. 

(Recess.) 

Q. (By Mr. Rankin) : Before the recess we 
were talking about Exhibit 29, which was your 
letter of March 15, 1947, to Brewer at Portland. 
"Enclosed is a statement of your account for 1946, 
also January and February of this year." 

So as to expedite it, do you have the statement of 
your account for 1946 that was enclosed here? 

A. No, sir, I don't. 

Mr. Rankin : For the Court's information, at the 
previous hearing of this case in the Circuit Court 
Mr. Leo Smith gave that letter to Mr. Bernard and 
Mr. Bernard says he gave it back. 

The Court: I have heard about that. [141] 

Mr, Rankin : And we do not know where that is 
now. 

The Court : Very well. 

Mr. Rankin: Is that statement of January and 
February, 1947, in this list of exhibits? 

A. Yes, sir. 



vs. Charles P. Brewer, et al, 223 

(Testimony of Harold W. Hilts.) 

Q. What is the number that appears? 

Mr. Bernard: Did I understand Mr. Rankin to 
say that at the hearing in the Circuit Court he gave 
this statement of account for 1946 or this letter*? 

Mr. Rankin: No, the statement of the account 
and the letter. They are both together. 

Mr. Bernard: No, just the letter. 

Mr. Rankin: I wasn't there, then. I don't know 
anything about that. Mr. Bernard and Mr. Smith 
will have to finish that. 

The Court: Don't argue about that. 

Q. (By Mr. Rankin) : Do you find that letter? 
That statement, rather ? A. Yes. 

Q. What is the exhibit number? 

A. Exhibit 57. 

Q. This letter (Exhibit 29) says : " You will note 
that this splits everything across the board for 1946 
and we both come out with $1,479.65 and you still 
have your $1,000 investment in the business." 

What did that indicate that the total revenue for 
1946 was? 

A. Well, the total amount that was split was 
$1,479.65. 

Q. The third paragraph says: "For January 
and February there is a net profit of $1,016.55 with 
the franchise out of it, now you have drawn $512.22 
for both months" 

What franchise did you refer to when you said 
"the franchise out of it"? 

A. I referred to the franchise that was in effect 
as of January 1, 1947, and the franchise that I re- 



224 i ; Pest Control Service 

(Testimony of Harold W. Hilts.) 
f erred to in this letter was based on the 20-80 per 
ctot basis, which w^as for January and February 
of 1947. 

Q. Then you say "now you have drawn $512.22 
for both months; if we take $512.22 like you did 
that will be your franchise for January and Feb- 
ruary. " What did you mean then by " franchise " ? 

A. I meant there that in the discussion that I 
lud with Mr. Sibert down in Oakland March 15th, 
at the time this letter was written, that there was 
a thought brought to my mind by the Eastern Ore- 
gon" venture was not as profitable as we had con- 
sidered that it would be, and, on the basis that it 
was not profitable, I had suggested to Mr. Sibert 
that we, in trying to help Mr. Brewer, show him that 
we were in favor of trying to keep the man going 
and so he could make a supreme success of the area, 
without financial responsibility on his shoulders, 
that we would be willing to take for January and 
February the same amount that he took up to De- 
cember 31st, 1946, and incorporated [143] that in 
this letter. 

Q. Did Mr. Brewer make that request of you? 
. A. He did not. 

Q. Was there any suggestion by Mr. Brewer to 
that effect in consultations or conferences you had 
with him in March or at any other time ? 

A. No, sir. 

Q. Was it agreed to and this notice sent before 
Mr. Brewer was aware that it was to be done? 



vs. Charles P. Brewer, el al. 225 

(Testimony of Harold W. Hilts.) 

A. Please state the question again. I didn't 
get it. 

Q. Was this agreement of yourself and Mr. Sib- 
ert to divide this January and February, 1947, 
return on the basis of the dollar-home dollar-com- 
pany done before Mr. Brewer knew anything 
about it ? A. Yes, sir. 

Q. "Now you have paid $994.25 as franchise for 
January and February which is $482.03 over your 
January and February franchise." What did you 
mean by that, "over your January and February 
franchise ' ' ? 

A. I meant that it was over the payment on the 
basis of the 20-80 per cent of the $994.25 which was 
in effect for January and February and, therefore, 
according to the terms of the agreement that he 
had with Mr. Sibert. 

Q. Your letter continues: "* * * as per above 
figures, this will be credited to the $1,479.65, which 
leaves $997.62 which [144] will wipe off 1946." 

How much had he made in 1946? 

A. How much? I don't understand that ques- 
tion. 

Q. What had he made in 1946, do you know? 
In other w r ords, what did this $1,479.65 refer to? 

A. That refers to the dollar-for-dollar agree- 
ment; in other words, $1,479.65 was his portion, 
and we would get $1,479.65 for 1946, from July 1st 
to December 31st. 

Q. How was it paid? - 

A. It was never paid. 



226 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. Was it paid by this? 

A. No, sir, that didn't apply in 1946. The pay- 
ments that he made applied on January and Feb- 
ruary. 

Q. Maybe it is my fault that I do not under- 
stand this, Mr. Hilts, but it says here, "This will 
be credited to the $1,479.65." Where do you get 
the $1,479.65? 

A. That was the statement that was attached to 
the letter. 

Q. Was that due from Brewer to Paramount? 

A. That is correct. 

Q. What for? What was the basis of that ob- 
ligation ? 

A. On the change of payment basis he had with 
Sibert, and it was due for the period July 1st to 
December 31st, 1946. 

Q. That is what I understood. I didn't know 
that you gave that. It is the contention by Mr. 
Brewer that this business was in a very poor con- 
dition and that he put it in a good condition, [145] 
this agency here, and he said something to the 
effect that when he took over this business it was in 
the red. Is that true? A. No, sir. 

Q. Do you know what the amount of earnings of 
this Oregon branch were prior to, at the time of, 
and immediately subsequent to Mr. Brewer's taking 
over in Oregon? 

A. I will have to go back to 1945 to bring that 
out and show you the comparison. 



vs. Charles P. Brewer, et al. 227 

(Testimony of Harold W. Hilts.) 

During 1945 we never lost money up here in Ore- 
gon, which was — We never lost money up here in 
Oregon with the exception of one month, which was 
the month of December. 

Q. What year? 

A. 1945. At that time the loss was only about 
$22.00. I don't remember the exact figure. 

In January and February and March of 1946 we 
also made money, and we have had a statement pre- 
pared on that basis. I believe I turned those over 
to you. 

In April and May after Mr. Brewer came to this 
area, the records show that we absolutely lost money. 
Then, again in June, it started to pick up again. 

Q. Up to the time Mr. Brewer took control, 
was there any loss? A. No, sir. 

Q. Immediately afterwards, for how many 
months was there a loss ? [146] 

A. For a — For two months after that. 

Q. Then, after that, did Mr. Brewer start to 
make money? 

A. Then he had started to show a little gain. 

Q. Up to December, then, 1946, December 31, 
1946, when this amount that you describe in your 
letter was due? A. That is correct. 

Q. You go on and say. "Ted tried to explain this 
to me just before I came up this last time, but I 
didn't get it." That has reference to what? 

A. That was in reference to the agreement that 
he had had with Mr. Brewer September 12, 1946. 



228 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. " Regarding Brooks and Ahern " Who 

were they'? 

A, Mr. Brooks and Mr. Ahern were servicemen 
and salesmen that were involved in the Eastern 
Oregon extension campaign. 

Q. "• * * We will split this the same." What 
did you mean by that? 

A. The understanding there was that we would 
take the expenses and split them in half and we 
would take any income derived from this venture 
and split that in half, and we would both bear half 
of ! the burden; the company would bear its half 
and Mr. Brewer would bear his half; and, if there 
was a profit, that would be split ; if there was a loss, 
that would be split. 

Q. What actually happened under that agree- 
ment? A. It was a loss. 

Q. What was done ? Were there any moneys re- 
ceived at all from [147] the business? 

' A, There were, and the income came into the 
Portland office and we paid the expenses. To begin 
with, it was one of those deals where we got the 
bad end of the deal until we had a settlement. 

Q. What became of the money that was paid in? 

A. Mr. Brewer got it. 

Q, Have you been paid any of that? 

A. No, sir. 

Q. What became of the expenses that you in- 
curred? A. We paid them. 

Q. Did Mr. Brewer compensate you? 

A. No, sir. 



vs. Charles P. Brewer, et al. 229 

(Testimony of Harold W. Hilts.) 

Q. When, after March 15, did you again come 
in contact with Mr. Brewer in relation to this busi- 
ness between Paramount and Brewer? 

A. In April. 

Q. What time? 

A. Oh, the first part of the month. I don't 
remember the exact date. 

Q. What was the subject of that discussion? 

A. It was carried on on the same basis as we 
have always operated. I had asked if he had re- 
ceived his letter of settlement and I think he said 
yes; he seemed to be satisfied with it, and I went 
ahead and prepared my examination of his records, 
closed them, prepared my profit and loss and bal- 
ance statements and took them back to Oakland and 
sent them back to him. 

At that time he also saw me off at the airport. 
He transported me back and forth from the airport 
and our relationship was of the best. 

Q. When did you next see Mr. Brewer? 

A, In May, 1947. 

Q. At what time? 

A. Around the 14th or 15th. 

Q. What was the occasion? What was discussed 
in relation to this business then, if anything? 

A. Just the same procedure. We went right 
along on the same basis. 

Q. When did you next see Mr. Brewer? 

A. In June, June 17th of 1947. 

Q. Where? 



230 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

A. I saw him here in Portland, and at that time 
Mr. Sibert accompanied me on the trip. We both 
were together with Mr. Brewer in the office here 
and went over the affairs of the business. 

Q. When did you next see Mr. Brewer? 

A. July 9, 1947. 

Q. What was the occasion? 

A. At that time I went ahead with my regular 
procedure and also prepared a settlement. We had 
an understanding, Mr. Sibert, Mr. Brewer and my- 
self, back in June of 1947; we had an understand- 
ing [149] where he would request that we allow 
our settlement of the accounting on the franchise 
to run for the fiscal year which would be from 
July I of 1946 to June 30 of 1947, and we mutually 
agreed to that. 

Back in June we also set forth a budget for the 
business, as the way the figures were on the books, 
stating absolutely the expenses that were involved 
and the income. Mr. Brewer had $3,000 business, 
monthly business, on the books. 

Q. I will come back to that in a moment. When 
did you next have any conference with Mr. Brewer ? 

A. July 9, 1947. 

Q. After July 9th? 

A. The next time I saw Mr. Brewer was July 
31, 1947. 

Q. That was after the termination or about the 
termination ? 

A. That was after we had received the letter in 
reference to terminating his agreement with us. 



vs. Charles P. Brewer, et al. 231 

(Testimony of Harold W. Hilts.) 

Q. From July 1, 1946, to and including the con- 
ference and meeting of July 9, 1947, had Mr. Brewer 
expressed to you any intention of terminating this 
relationship between the Paramount and himself, 
disclosed by this agent's agreement? 

A. No, sir, none whatsoever. As a matter of 
fact, our relationship was pretty much on an even 
keel all the time. There was never any mention 
made relative to dissatisfaction. In fact, I had made 
different recommendations to Mr. Brewer, as I do 
when I am in the territory, because of my knowl- 
edge of the business, [150] because I am also a 
licensed operator and I understand the outside oper- 
ations as well as I do the accounting. 

Q. Did Mr. Brewer indicate that he wanted to 
terminate this relationship at any time? 

A. He certainly did not. 

Q. Did he indicate to you that there was a de- 
sire on his part to get a different adjustment that 
he was insisting on with respect to pay, other than 
what you had granted? A. No, sir. 

Q. Have you, Mr. Hilts, stated fully the descrip- 
tion of the relationship that existed between Para- 
mount Pest Control Service and Mr. Brewer during 
that whole year? Is there anything you can add to 
what you have said about your relations ? 

A. Why, I believe that while I was talking 
about the June 17th trip there was an item that I 
had not related, which was to the effect that Mr. 
Brewer had said he had contacted the bank that he 
was doing business with here and he wished to be 



232 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 
able to let them know how he was getting along in 
his business, and he requested that we prepare a 
statement as to the operations. As he put it, the. 
bank said that they wanted to know just exactly 
what the situation was as to his personal and busi- 
ness affairs, which is according to banking proce- 
dure, and at that time we prepared a rough draft 
and went down to the bank, Mr. Sibert, myself and 
Mr. Brewer, and with the express purpose of trying 
to get him acquainted with the bank and his posi- 
tion with the [151] bank — the banker happened to 
be Mr. Ridehalgh, of the California bank, I believe 
it was, or the Bank of California, I don't know 
which it is, — and he at that time listed all the opera- 
tions of Mr. Brewer and the Paramount Pest Con- 
trol Service. 

Q. Did Mr. Brewer then tell the banker in your 
presence, or did he tell anyone, that he was dissatis- 
fied with the treatment he was getting here, that the 
treatment he was getting was not proper or that the 
compensation he was receiving was not adequate? 

A. No, sir, not at all. May I go on to say that 
at the time of the June 17th conference which you 
asked me about 

Q. I was just coming to that now. Will you 
please refer to that particular occasion and tell what 
transpired and what was said between the repre- 
sentatives of Paramount, Mr. Sibert and yourself 
and Mr. Brewer? 

A. During that time, after T was completed 
with the records, closing the business up to and 



vs. Charles P. Brewer, et al. 233 

(Testimony of Harold W. Hilts.) 
including' May 31st, 1947, we sat down and made a 
budget from the figures in his records, and that 
budget proved, being based on the amount of busi- 
ness that he had, that he had over $3,000 worth of 
monthly business, that he could keep his franchise 
and pay all his bills and keep his territory in opera- 
tion and come out with $855 a month, in round fig- 
ures and Mr. Brewer's own words at that time was 
to the effect, "Well, that being the case, I can't 
afford not to be on the 20-80 per cent franchise 
basis because I will make more money that way than 
I would the other way." Whereas, we would [152] 
only be getting $600 out of it, he would be getting 
$850, and that is not uncommon in our business. 

The Court: What is not uncommon'? 

A. It is not uncommon in our business for a ter- 
ritory agent to receive more compensation on the 
franchise basis than they would receive on the 20 
per cent. 

The Court : Do they usually get about that, right 
around $10,000 a year? 

A. We have had operators earn more than that, 
sir. 

The Court: What is your gross business, about 1 ? 

A. You refer to all our operations'? 

The Court: That is right. 

A. Well, it runs upwards of probably $700,000. 

The Court: A year? 

A. Yes, sir. 



234 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

The Court : Increased pretty rapidly, has it ? 

A. Well, it has a pretty steady growth now. It 
increased rapidly during the war, as most businesses - 
did, but we still have not dropped down. We are 
increasing. 

The Court: A very profitable business*? 

A. A very profitable business, if it is run right, 
yes. 

The Court: Highly profitable, at that rate? 

A. That is correct. 

Q. (By Mr. Rankin) : Your franchise calls for 
an 80-20 distribution, [153] respectively, between 
agent and company % A. Yes, sir. 

Q. What do you estimate, in general, it costs to 
process or serve these contracts, with the expenses 
paid by the agent ! 

A. 60 per cent, average. In other words, that is 
the basis on which the franchises are drawn. 

Q. So, that leaves 20 per cent for the agent and 
20 per cent for the company ? 

A. That is correct, sir. 

Q. 20 for the company is fixed, is it not*? 

A. Yes, sir. 

Q. And is the 20 per cent for the agent fixed, or 
can he vary that 20 per cent by his method of oper- 
ating the territory ? 

A. He can definitely vary that by his method of 
operating. 

Q. What are some of the figures that arel ess? 
How much less than 60 per cent does an agent use 
in operating his territory? 



vs. Charles P. Brewer, et al. 235 

(Testimony of Harold W. Hilts.) 

A. Do you mean how much more than 60 per 
cent? 

Q. How much more and how much less? If he 
operates at less than 60 per cent, he gets that dif- 
ference, doesn't he? A. That is right. 

Q. How far down below 60 per cent do agents 
go? A. It can go as low as 45 per cent. 

Q. Sometimes if an agent is not a particularly 
good operator, how much more than 60 per cent does 
it cost him ? 

A. It can run as high as 75 per cent operation. 

Q. Going back to the June 17, 1947, conference, 
was there anything else that was said at that time 
between Mr. Brewer and you and Mr. Sibert, that 
you have not related ? 

A. Yes, there was. Mrs. Brewer was in San 
Francisco or Sunny Hills, California, and, when we 
found that out, Mr. Sibert and Mr. Brewer and 
myself — While Mr. Brewer was taking us to the 
airport, why, Mr. Sibert got the idea probably he 
would like to go down and see his wife. 

Q. Is that the same transaction or occurrence 
Mr. Sibert testified about this morning? 

A. Yes, sir. 

Mr. Rankin: Well, we won't repeat it. 

The Court: Whom do you blame for all this 
trouble, Mrs. Brewer? Is that what you were lead- 
ing up a minute ago ? 

A. I didn't make any contention about it, no, 
sir. 



236 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

The Court: Did you hear some remarks she 
made down there 1 ? 

A. No, sir. You mean that is why I started to . 
relate that? 

The Court: Yes. 

A. No, sir. 

Q. (By Mr. Rankin) : Do you have anything to 
say about the collections here that has not been 
said? 

A. Well, I noticed that the balances that were 
due Mr. Brewer that the customers owed him kept 
crawling up each month ; in other words, they were 
not collected, and I would keep referring to it, and 
at the end of June there was a balance of over [155] 
$3500— $3600— on the books. 

A. As I recall, the contract, which is here and 
which speaks for itself, makes him responsible for 
those collections ? A. That is correct. 

Q. That is, they were to be made by Mr. Brewer ? 

A. Yes, sir. 

Q. Did he make those collections you are talking 
about ? 

A. He eventually collected all he could get out 
of the business; in fact, he collected everything, and 
then drew it out of the bank. 

Q. Just describe what you mean by that. What 
was his process? 

A. Well, he knew that he had to clear his 
accounts receivable by the medium of showing pay- 
ment by the collection that he made on those ac- 
counts receivable. Therefore, he ■"ould not just 



vs. Charles P. Bracer, et al. 237 

(Testimony of Harold W. Hilts.) 
collect the money and stick it in his own pocket, 
figuring that it was his. He had to run it through 
the books, so he would run it through the books. 
Then he would turn around and draw a voucher or 
check and put it in his own personal account or do 
whatever he wanted to with it. 

Q. Let us turn to some of these items that we 
are claiming here, Mr. Hilts. 

The Court: Are you going into the question of 
damages % 

Mr. Rankin : Yes. 

The Court: Put that off for awhile. Let us try 
the other feature. Let us try the equity feature of 
this case. [156] 

Mr. Rankin: All right, your Honor. 

Q. Did you cover everything now that occurred 
in the June 17, 1947, meeting or conference? 

A. Yes, sir, except that you stopped me w r hen I 
was relating the conversation. 

Q. That is the same thing Mr. Sibert testified to % 

A. , Yes. 

Q. So there is no need to repeat it. Now, then, 
you spoke of an accounting in July, July 9, 1947. 

A. Yes. 

Q. How did you prepare that accounting? 

A. Well, that was prepared on the basis of "You 
take a dollar, we take a dollar." 

Q. And why was that done? 

A. Because Mr. Brewer had requested that we 
run it up to the fiscal year, as I mentioned in my 



238 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

previous testimony, and asked that we wait until 

the end of June, June 30th, to make settlement. 

Q. Did you agree to do that ! A. We did.- 

Q. At his request? A. Yes, sir. 

Q. State for what period that compromise or 
adjustment covered? 

A. Covered from July 1, 1946, to June 30, 1947. 

Q. Did you prepare a statement for Brewer in 
connection with the accounting on that basis for 
that year? [157] A. Yes, sir, I did. 

Q. Is there a copy of it in evidence? 

A. Yes, there is. 

Q. What exhibit number is it ? 

A. Exhibit No. 36. 

Q. Did you show these figures to Mr. Brewer? 

A. Mr. Brewer helped me compile them. As a 
matter of fact, we spent over two hours on it 
together. 

Q. Where did you and Mr. Brewer get the fig- 
ures from? 

A. Most of them were taken from his records. 
Some of them were in invoice form that were not 
entered on his records. 

Q. Then what was said by you and Mr. Brewer 
with respect to this accounting of July 9th ? 

A. Prior to the time we started to effect this 
accounting, Mr. Brewer had a notion that we were 
going to make an accounting as of June 30, 1947, 
and I told him after I had prepared my examina- 
tion of his books up to June 30, 1947, we were going 
to sit down and effect a settlement, taking in the 



vs. Charles P. Brewer, et ah 239 

(Testimony of Harold W. Hilts.) 
fiscal year's operations, and I told him that we were 
going to settle it, and he agreed that we should settle 
it if I had to stay a week to do it. Thereafter, we 
sat down and started to work on the figures. 

Q. What did you do? Just go ahead and state 
w T hat w T as done in the compilation of this account- 
ing, please? 

A. To get our dollar-for-dollar agreement, we 
took the accounts [158] receivable that he could col- 
lect, money that he could get; we took the asset 
investment that had not been charged into the rec- 
ords as expenses; took the cash on hand in the 
bank which was recorded against the expenses of 
operation, that is, left after the operation, and then 
we also recorded the amount of money that Mr. 
Brewer himself had drawn for that period of time, 
and added those figures. 

Then we had some bills that were on hand that 
had not been paid as of June 30th, because the books 
were operated on a cash basis, and they were not 
set up in accounts payable and, therefore, they weie 
due. We subtracted that figure. 

Then we took half of the expenses of the Eastern 
Oregon run and subtracted that figure. 

Then we took the bills that Mr. Brewer had owed 
Oakland, which were accrued and some of which 
were even involved in the settlement or accounting 
on the settlement as of December 31st, and we sub- 
tracted that figure. 

Then the total was split in half. That would give 
us the exact figure, the real amount that there was 



240 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 
left, including Mr. Brewer's drawings and every- 
thing in the business. 

Then we took one-half of the Eastern Oregon run 
that had not been paid us that year, and we added 
that, which was due us. 

Then we subtracted half of the amount paid a 
man by the name of Tonach, wages for the period 
for which he was hired, [159] and gave him credit 
for that. 

Then the statement goes on to show one-half of 
the amount of the franchise that was paid, based on 
January and February of 1947, and we gave him 
credit for that, and then we show the overdue bills 
that was owing to Oakland, and we added that. 

That was the figure I referred to as part of it 
being in 1946, because we had that money coming. 
We had never been paid that money, and it was 
justly ours. 

Then there was a piece of equipment known as 
"Hi Fog" that had not been paid for, which would 
become an asset on his records, and he owed us 
for it, and we charged that to him. 

We took the total figure and Mr. Brewer agreed 
upon it, so much so that he gave me a check in pay- 
ment of part of this settlement. 

Q. What was the total that he owed, according 
to your joint understanding? A. $3,359.61. 

Q. What amount did he pay? 

A. He paid $259.61, leaving $3,100, in round 
figures. 



vs. Charles F. Brewer, et al. 241 

(Testimony of Harold W. Hilts.) 

Q. Was there any discussion of the payment 1 ? 

A. There was not, and we went on, after we had 
agreed upon it, and I asked him how he wanted to 
pay it off, and lie said, "Well, I will see how the 
money comes in. As the money comes in, I will be 
glad to, naturally, pay it off, as long as it doesn't 
hurt [160] the business," and we accepted it that 
way and agreed upon it. 

Q. Why didn't he pay the total amount, $3,359.61 ? 

A. He didn 't have that much, although there was 
that much and more represented in his books and 
assets and inventories. He didn't have that much 
cash on hand. 

Q. Was there anything said why he should pay 
that odd amount? 

A. No. That was his way of wanting to do it, 
and I accepted it that way. In that I was in every 
way trying to make him feel that there was no pres- 
sure being brought to bear on him at all. That 
was his own figure, his own idea, and I accepted it. 

Q. > Was there any indication on July 9th, when 
you had this conference with him, that he was going 
to cancel his contract thirteen days later? 

A. No, sir, none whatsoever. When we received 
his letter in our Oakland office, it was like a bomb- 
shell in our camp. 

Q. What did you do after you received that 
letter 6 ? By the way, going back to that statement, 
which exhibit is that ? A. 36. 



242 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. Did he make any endorsement on it? 

A. Yes, lie did. He set forth the check number 
and the amount that he paid on it, making a record- 
of that, so he could keep track of it. 

Q. Is that endorsement in his own handwriting? 

A. That is in his own handwriting. [161] 

Q. What does it say? 

A. It says "July 9, 1947, paid, Check Number 
413, $259.61." 

Q. When did you next come in contact with Mr. 
Brewer? When did you next come in contact with 
Mr. Brewer after the receipt of his letter of July 
24, 1947? 

A. The next time I saw Mr. Brewer was July 
31st, 1947. 

Q. Whereabouts was that? 

A. In Portland, Oregon. I was registered in 
the Roosevelt Hotel at the time, and Mr. Brewer 
came up to the hotel. He knew, of course, that I was 
in town, and when he came into the hotel room my 
first words to him were, "Well, Charlie, what in the 
world happened?" And he says, "Well, I don't 
know; just couldn't seem to make it go," and so he 
said 

I said, "Well," I said, "what are you going to 
do?" And he said, "Well, she is all yours, if you 
want it." He said, "Tomorrow you come down and 
we will take an inventory and I will give you these 
supplies," and we had a general conversation along 
that line, and so I asked him where I could get in 



vs. Charles P. Brewer, et ai. 243 

(Testimony of Harold W. Hilts.) 
touch with Mr. Rightmire and he said, "I don't 
know exactly where he lives," and I said, "Well, 
can't you give me his address % Isn't it in the office?" 

"Yes," he said, "I will get it for you. I will get 
it at the office on my way home. I will get it for 
you and call you up and give it to you on the 
telephone." [162] 

I said, "I would like to see him tonight, if I 
could," and he said, "I don't know. I don't think 
it will do you much good to see Mr. Rightmire. 
Rightmire isn't going to stay in the exterminating 
business any more. Rightmire is sick." 

I said, "Well, if, as you say, he is sick, I would 
like to go, as a company representative, and see him 
and tell him we are sorry about his sickness, and be 
interested in general because he is an employee of 
ours." 

He said, "Well, I owe Mr. Rightmire a vacation." 
And he said, "He is through. He isn't going to 
work any more." 

So J said, "Then, if you will give me his address, 
I will appreciate it," and he said, "I will stop at 
the office." 

I waited for over an hour, which was more than 
ample time for him to arrive at the office and obtain 
the address, and I didn't hear from him, so I made 
a call to his home and asked him what had happened. 

He said, "Well, I couldn't find the address," so I 
said to him, "Well, I understand you were going to 
at least let me know," and he said, "Well, I was 
going to call you up while I was eating dinner," so 



244 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

I said, "Well, that is fine," and hung up. There 

was no more conversation at that time. 

I found out later that his address was in the 
records and that it was in a little slide telephone 
file that was in the office, and so I obtained it myself 
and saw Rightmire the next day. [163] 

Q. What was your conversation with Mr. Right- 
mire ? 

A. I went out to his house, and we sat out front 
talking, and he told me that he thought Mr. Sibert 
was one of the dirtiest guys he had ever talked to 
or seen and that he wouldn't have any part of it, 
and that he never realized what a dirty louse he 
was, and, of course, that made my blood boil, because 
I had been associated with Mr. Sibert for some time, 
twelve or fourteen years; had known him prior to 
my association with the business. He went on with 
that conversation. He said he would not work in 
the extermination business for anybody. He said, 
"I am through/' 

I said, "What are you going to do?" And he 
said, "1 don't know what I am going to do." He 
said that. 

"Well," I said, "you are really not interested at 
all?" And he said, "No, I'm sick. I am not going 
to work at all. I have had to take treatments from 
my doctor and I am, in general, run down. I have 
been working too hard for Brewer, and I am run 
down. I don't know what I will do. Maybe I will 
get something, as 1 have had some previous selling 
experience. ' ' 



vs. Charles P. Brewer, et cH. 245 

(Testimony of Harold W. Hilts.) 

We continued the conversation in general, i 
then he reiterated that he would not have any. part 
of Paramount or any of its organization at all; he 
was entirely through and said that there was no 
reason in the world for him to work for an outfit- 
that would do things like Brewer or Paramount, 
or like Paramount, had done, and so then X said, 
"Well, you are not [164] going into business at all*? 
Then I can't offer you the proposition that I had 
in mind when I came out here," and he said, "No, 
I am not interested at all." 

Q. When did you know he was working for 
Brewer % 

A. We found that out, well, the third or fourth 
day of August, on contacting our accounts, through 
men that we had to bring into this area to protect 
our business, because we operated on a monthly 
service basis, and there is so much business that has 
to be done and so many men have to do it, and, as 
we understood one fellow, we did not have any or- 
ganization and our customers knew we did not have 
any organization; in fact, we were supposed to have 
been liquidating, which was news to us. 

While we were contacting our customers, our men 
would run into these service slips of Brewer's and, 
in some instances, Mr. Rightmire's name appeared, 
indicating that he had serviced them. 

Q. Did you ever discuss the matter with Mr. 
Eightmire again? 

A. I never did. I have never seen him since. 



246 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. In respect to Mr. Duncan, did you have any 
conversation with Mr. Duncan prior to August 1, 
1947? 

A. Yes, I saw him during the time that I was 
here on the 31st. 

Q. The 31st of what? 

A. July, 1947. He came down to the warehouse 
with Mr. Brewer on one occasion. 

Q, When did you learn that Mr. Duncan had 
gone with Mr. Brewer? [165] 

A, Not until later on, because Mr. Duncan was 
supposed to have taken a trip back East or the 
Middle West and then come back out here so, if he 
was going to work for Mr. Brewer, according to 
all I can find out, that made the earliest date around 
August 20th, or thereabouts. 

Q. Had Mr. Duncan at any time during 1947 
indicated to you any dissatisfaction that he had 
with the company? A. He did not, no, sir. 

Q. What was the nature of your relationship 
with Duncan during 1947 or any other time, prior 
to August 1, 1947? 

A. Mr. Duncan had always had a good relation- 
ship with me, as with all — as I have with all of our 
employees, 

Q. Was that true of the relationship with the 
company? A. Yes. 

Q. Do you know of any time when he had spoken 
of Mr. Sibert or any other member of the company 
as Mr. Rightmire had spoken of Mr. Sibert? 

A. No, sir, I don't. 



vs. Charles P. Brewer, et al. 247 

(Testimony of Harold W. Hilts.) 

Q. How about Merriott? 

A. I had a conversation with Mr. Merriott Sat- 
urday morning. He was working on his car. 

Q. What Saturday morning? 

A. Of August 1st. He was working on his car 
in back of Mr. Brewer's home, and at that time I 
talked to him and asked him if he wanted to con- 
tinue to work for Paramount Pest Control [166] 
Service and he said, "Sure, I will work for anybody 
that will give me a job." 

I said, "Well, I think we can, offer you a good 
job," and he said, "Well, I will be there." I said, 
"Well, when will you show up?" And he said, "I 
think I will have my car finished so I can be on the 
job Monday morning." 

I said, "That being the case, we will look for you 
Monday morning," and he said, "That is okeh by 
me. I will be there," and, of course, Monday he 
didn't show up. 

Q. Had there been any indication on Mr. Mer- 
riott 's part prior to that time as to whether or not 
he was dissatisfied in any manner as a Paramount 
Pest Control Service employee? 

A. None that I could notice at all. 

Q. Did you have any conversation with Mrs. 
Rosalie Brewer, the wife of Charles P. Brewer? 

Mr. Benard : When ? 

Mr. Rankin: During the month of July. 

A. No. 

Q. July, 1947? 

A. July of 1947? I didn't see Mrs. Brewer at all. 



248 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. You ultimately ascertained, did you not, that 
Mr. Brewer, your agent, and Mr. Duncan, Mr. 
Rightrnire and Mr. Merriott, who had been your 
employees and operators, were all leaving your com- 
pany ? A. Yes, sir. [167] 

Q. And Mrs. Brewer, who had kept the office, 
was leaving with her husband? 

A. That is correct. 

Q. Was there anybody left in your organization 
here in Portland? 

A. There was not. We had to transport men 
from Washington and California into this area, at 
great expense to us, to get them to contact our 
customers. We even had to bring supplies and 
equipment into the area. I had ordered it ahead 
of time because Mr. Brewer, after saying that he 
would turn over to me the equipment, as per his 
franchise agreement, on termination, that he would 
turn over to me his supplies and equipment — I left 
it at that until I tried to get them on Saturday morn- 
ing, August 1st, at which time he re fused me entry 
into his warehouse and instructed the man, Mr. 
Celsi, with wdiom the lease was signed, not to allow 
me to go hi there at all, even after he had turned 
over the key to me to that warehouse, and said that 
I had no business in there, and there was a little 
bit of a scene at the time, at whh h time we stated 
to Mr. Celsi — Mr. Fisher and I were there, and Mr. 
Brewer and Duncan were there together, and I said, 
u We will abide by Mr. Brewer's request and we 
will not touch the warehouse or try to gain entry 
to it until he requests it himself/' 



vs. Charles P. Brewer, et at. 249 

(Testimony of Harold W. Hilts.) 

Q. How long did you stay here at that time? 

A. I was here about three weeks. 

Q. During- that three weeks what were you 
doing? [168] 

A. Checking the supplies, trying to help organize 
the men that were then sent here and, in some cases, 
contacting a few of the customers, former customers. 
I found out they were former customers; because 
of Mr. Brewer's action, they were not our customers 
any more. Managed the business in general. 

Q. Did you get any inventory from Mr. Brewer 
of the articles that had been here in the Paramount 
Pest Control Service ? 

A. Mr. Brewer and I took inventory together. 

Q. What happened to that % 

A. That was retained in the files. 

Q. What did it disclose as to whether or not you 
had been delivered all the equipment that you were 
to take? 

A. Well, when I realized what had happened, as 
per good business judgment, I took into considera- 
tion that probably I did not have all the inventory. 
I did not think I had a complete inventory and, 
so, I requested to go out to his house with him. At 
that time I went out to the house with him and 
we picked up various little items and some chemicals 
and some things like that, and he had told me at 
that time there was a little piece of spray equipment, 
which is foreign to our type of operation, and lie 
said he had purchased that himself, or he had made 
a down payment on it, but he had — or he had bor- 



250 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

rowed it — and he had turned it back. I left that 

in his possession, as far as that is concerned. 

Of course, he refused to turn over any of the 
equipment [169] after that time which was in the 
warehouse. As a matter of fact, the actual situa- 
tion was this, that, after he gave me access to the 
warehouse and the office, then, when I tried to get 
some equipment out of it is when I ran into trouble 
with Mr. Celsi, the owner of the warehouse, and 
he would not allow me entrance until Mr. Brewer 
had come down, and I did notice, when Mr. Brewer 
came down and checked the equipment later, that 
there was equipment that was not there that he 
had shown on the inventory, indicating that he had 
taken it out and was bringing it back, when he 
finally agreed to turn it over to us. His excuse 
was — it was quite an involved story. 

These supplies and equipment, or the equipment 
in this particular case, that he had brought back, 
which were missing upon my second investigation 
of the warehouse, he said was used to spray some 
insects that was in Mr. Earl Merriott's home, but 
the complication of that is that Mr. Earl Merriott 
was supposed to have been on a hunting trip and 
he was still supposed to have been spraying his home 
with this equipment. 

Q. How about the chemicals ? Do you have any 
record of the chemicals, as to whether or not Mr. 
Brewer took any of the chemicals'? 

A. I wouldn't know, because I did not search 
his premises. I didn't think that was my right. 



vs. Charles P. Brewer, et al. 251 

(Testimony of Harold W. Hilts.) 

Q. You don't know whether or not any other 
department of Paramount Pest Control Service fur- 
nished him with any particular [170] poisons which 
were not returned to Paramount later? 

A. I didn't get your question, Mr. Rankin. 

Q. I had reference to whether you had knowl- 
edge that some other departments of Paramount 
Pest Control A. Oh. 

Q. some other agency had furnished him 

with any materials ? 

A. Mr. Osborn from Seattle, manager and agent, 
had sent him, just previous to this time — I say just 
previous to this time ; a matter of a few days — sonie 
Compound 1080 that he had borrowed from Mr. 
Brewer at an earlier date. 

Q. Do you know what quantity that was ? 

A. Yes, he returned him three cans. 

Q. Is that 1080 the item Mr. Bushing described 
as being very difficult to get? A. Yes, sir. 

Q. And being very lethal in its qualities? 

A. . That is the product, yes. 

Q. Three cans. What is the size of those cans? 

A. They are eight-ounce cans. 

Q. How long would three eight-ounce cans last, 
ordinarily ? 

A. Depends upon how much business a man did 
with those three cans. It could last a year. 

Q. Do you know whether or not Mr. Brewer was 
doing business as a pest control business under any 
assumed name? A. Yes. [171] 



252 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. When did you learn that ? 

A. Immediately, on the 3rd or 4th of August. 

Q. August 3rd or 4th? A. Yes. 

Mr. Rankin: I think all this matter here is of 
record, your Honor. I will expedite it I think by 
simply calling the attention of the Court to it. 

Exhibit 46 is the assumed business name certifi- 
cate, sworn to by Rosalie Brewer before II. K. Phil- 
lips, Notary Public, acknowledged before H. K. 
Phillips, Notary Public, I should say, and recorded 
in the records of Multnomah County, Oregon, and 
attached to this is the following certificate by Al L. 
Brown, County Clerk: "... . do hereby certify that 
the above copy of assumed business name certificate 
is a correct transcript of the original, as the same 
appears of record and on file in my office and in my 
custody." 

: Then there is, as Exhibit 47, a certificate of re- 
tirement, reading: "Know All Men by these pres- 
ents that Rosalie Brewer, the undersigned who have 
(sic) heretofore been conducting the business of 
•Pest Control under the assumed name or style of 
Brewer's Pest Control and who have (sic) hereto- 
fore filed a certificate of such assumed name with 
the Clerk of the County of Multnomah, State of 
Oregon, have (sic) retired from the said business 
and no longer have (sic) any interest therein. 

"Witness our hands and seals this 27th day of 
August, [172] 1947/' and signed "Rosalie Brewer." 

On that same date, referring to the 27th of Au- 
gust, 1947, the following certificate of assumed busi- 



vs. Charles P. Brewer, et al. 253 

(Testimony of Harold W. Hilts.) 
ness name was filed: "Know All Men by These 
Presents, that the real and true name and postoffioe 
addresses of the persons conducting, having an 
interest in, or intending to conduct the business, of 
pest control under the name or style of Brewer's 
Pest Control, at 4929 N. E. 28th Ave., Portland 1.1, 
Oregon, Comity of Multnomah, State of Oregon, ares 
the following, to wit : Charles P. Brewer, Postoffiee 
address 4929 N. E. 28th Ave., Portland 11, Ore." 

All three of these certificates, two of assumed 
name and one of retirement, are duly certified by 
the County Clerk as being certificates on file in his 
office. 

Q. (By Mr. Rankin) : Now, Mr. Hilts, you have 
stated briefly that you foimd that Mr. Brewer was 
taking over some of the customers of Paramount 
Pest Control Service. Tell what you did in regard 
to that investigation. 

The Court : Lay that aside. I would like to hear 
the cross-examination now on what he has already 
testified about. 

Mr. Rankin: Yes, your Honor. All right. 

Cross-Examination 
By Mr. Bernard: 

Q. What contact did you have with Mr. Brewer 
at the time you came to Portland? Strike that. 
What contact did you have with Mr. Brewer up to 
the time you came to Portland in April, 1946? [173] 

A. Oh, I had seen him in the office. 



254 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. You did not discuss any of the formulas in 
any way, anything like that with him, did you ? 

A, No, sir. 

Q. When you carae to Portland in April, 1946, 
did anybody else come along i A. No, sir. 

Q. You came up to help him set up a set of 
books'? A. The books were already here. 

Q. What did you come up for'? 

A. We came up to assist him with the territory 
and get him acquainted with the operation of the 
area. Mr. Brewer had never been in a position to 
know these things. 

Q. How long were you here ? 

A. Oh, it was a week or ten days. 

Q. You had not discussed any of the formulas 
Of the company with him? 

A, Oh, we discussed certain things of operation, 
certainly, such as how certain things were being 
used, and I assisted him in some questions that he 
had asked and also gave him some advise as to what 
had been my experience. 

Q. In the extermination business ? 

A. Right. 

Q. What contact did you have with him after 
that, during the year 1946, if any? [174] 

A. I saw him the next time May 5, 1946. 

Q. Maybe I can bring it out this way: When 
were you informed by anybody that the contract or 
franchise was being modified as to the matter of 
payment? A. In December, 1946. 



vs. Charles P. Brewer, et al. 255 

(Testimony of Harold W. Hilts.) 

Q. December, 1946? A. Yes. 

Q. Who informed you as to that? 

A. Mr. Sibert 

Q. Did he tell you what he had agreed upon? 

A. Did he tell me? 

Q. Yes. A. Yes. 

Q. Did he tell you the date when he had agreed 
upon it? 

A. He told me it was in September, September 
12th. 

Q. He had never mentioned it to you up to that 
time ? A. No. 

Q. You testified as to some conversation you had 
with Brewer January 20, 1947. Did Mr. Brewer 
tell you at that time that it was not his understand- 
ing that this change in the basis of payment was to 
continue after January 1st, 

A. No, sir, he did not. 

Q. What did he tell you at that time? 

A. There was no specific mention of that. 

Q. I understood you on direct examination to 
say that on [175] January 20th he told you that 
there was to be a rearrangement as to percentages? 

A. That was up to December 31st. 

Q. When did he send — When, rather, did you 
send him this statement? A. March 15, 1947. 

Q. Maybe I can make it clearer. Maybe I had 
better make it clear. When did you send him the 
statement showing the January and February pay- 
ments made at that time on the 20-80 percentage 
basis? A. At that time, March 15th. 



256 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. Didn't you give that to him earlier than 
that? 

A. Not on January and February, no sir. I had- 
let him see my rough draft, but I didn't give him 
his statement. 

Q. You say you let him see your rough draft, — 
where? A. In Portland. 

Q. That showed the division of the profit 20-80 
under the franchise as written? 

A. It covered the franchise due, yes. 

Q. On what date did you show him that? 

A. March 13, 1947. 

Q. What did he say to you? 

A. He said, "Well, that is fine," and he made a 
payment to me. 

Q. What did he say to you about it? 

A. Nothing at all. [176] 

Q. Well, how did it happen that two days after- 
wards you sent him this letter, changing that ar- 
rangement and putting this on a different basis? 

A. That was of my own free will. 

Q. You mean to say you changed it of your own 
free will, without any suggestion from Brewer? 

A. Absolutely. 

Q. And without explaining to him why you were 
doing it ? 

A. I didn't have to explain it to him. He under- 
stood the settlement, as I found out later myself, 
about the December 31st settlement, and it was un- 
derstood by him. I didn't need to explain it to him. 



vs. Charles P. Brewer, et al. 257 

(Testimony of Harold W. Hilts.) 

Q. As I undersand it, you claim on March 13th 
you had rendered him a statement for January and 
February, made up on the 20-80 per cent basis'? 

A. Yes, that is right. 

Q. And he made no objection to it? 

A. He did not. He made a payment. 

Q. And. without any further conversation with 
him or suggestion from him, you wrote this letter 
of March 15, 1947, after conversing with Mr. Si- 
bert? A. Yes. 

Q. After conversing with Mr. Sibert? 

A. That is right. 

Q. Did you send him this letter special delivery ? 

A. I may have. I don't remember. We often do 
that. 

Q. Was it because he told you if you were going 
on with that old arrangement he was through? 

A. No, not at all. 

Q. Where did you address it to him, his home or 
the office? 

A. I wouldn't remember exactly. We addressed 
mail both places. 

Q. Is it not a fact that you sent that letter spec- 
ial delivery to his home? 

A. No, it is not not to my knowledge. 

Q. Would you say you did not? 

A. I don't know whether I did or not. I don't 
remember. 

Q. You say in here, "Now, you have paid 
$994.25 as franchise for January and February 



258 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

which is $482.03 over your January and February 

franchise." 

In other words, you had made out a statement 
and forwarded it to him with this letter showing 
January and February on the modified arrange- 
ment, hadn't you? 

A. No, sir, not on the modified arrangement. 

Q. In this March 15th letter? 

A. That is a correct statement that I sent the 
January and February statement. January and 
February was not on the modified arrangement. 
Those figures w T ere merely used — the statement I 
sent him at that time was as of December 31st. 

Q. You say, "For January and February there 
is a net profit of $1,016.55 with the franchise out of 
it, now you have drawn $512.22 [178] for both 
months ; if we take $512.22 like you did that will be 
your franchise for January and February." 

That was on a different basis than the one you 
had, which you showed him on March 13th, wasn't 
it? 

A. Yes. It was only set forth in that letter, how- 
ever. There was no different accounting as of Jan- 
uary and February, 1947, other than the 20-80 per- 
centage basis. 

Q. Then, you say: "Ted tried to explain this to 
me just before I came up this last time, but I didn't 
get it." Who do you mean by "Ted"? 

A. Mi'. Sibert is referred to as "Ted." He tried 
to explain to me the understanding that he had had 
with Mr. Brewer back in September, which ran up 
to December 31st of 1946, and I didn't understand 



vs. Charles P. Brewer, et al. 259 

(Testimony of Harold W. Hilts.) 

it, namely, operating dollar for dollar, on the dollar- 

for-dollar agreement. 

Q. Are you through? 

A. No. I said, namely, the dollar-for-dollar 
agreement. 

Q. Then, this paragraph in here where you say, 
"For January and February there is a net profit of 
$1,016.55 with the franchise out of it, now you have 
drawn $512.22 for both months ; if we take $512.22 
like you did that will be your franchise for January 
and February ", that was done out of the goodness 
of your heart, by you and Mr. Sibert ? 

A. That is exactly right. Could I have a copy of 
the exhibit so I could follow it? [179] 

Q. You have the exhibit there. 

A. All right. 

Q. I am not through referring to it, but if you 
want to read it and make any explanation, go ahead. 

A. No. 

Q. By the way, you spoke of a man named 
Taylor who was working here when Brewer got 
here or came up here. What was Taylor's arrange- 
ment with the company ? 

A. Spoke of a man by the name of Taylor ? 

Q. Yes, who preceded Mr. Brew T er. I will put it 
this way: Who was working in this territory prior 
to the time Mr. Brewer came ? A. Mr. Taylor. 

Q. What was Mr. Taylor getting 1 ? 

A. What? I don't understand. 

Q. What was his remuneration? What was he 
getting? 



260 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

He was working on a franchise — lie was working 
on a branch manager's agreement, the same agree- 
ment Mr. Brewer signed and was working on until 
July 1, 1946. 

Q. In other words, he was getting $250 a month ? 

A. No, he was getting $200 a month and he was 
getting 20 per cent of the gross profits in the terri- 
tory. 

Q. Is that the arrangement you gave Mr. 
Brewer when he first came up here? 

A. Exactly the same. 

Q. $200 a month plus 20 per cent of the gross 
profits? [180] A. Yes, sir. 

Q. That is the arrangement that was made with 
Mr. Brewer when he first came here? 

A. Yes, sir. Any men that are drawing over 
$200 per month would have been charged to him as 
commission at the end or beginning of each month, 
and if the territory did not make a profit so that he 
would receive anything like that, he still retained 
the amounts for the men that would be involved, 
and that was his salary. To show you the way we 
operate and the amount of fairness of it, we try to 
help these fellows; in other words, we don't say, "If 

you check out and don't get " We don't make a 

demand on him for it, never have. 

Q. I understand, then, on March 15th you sug- 
gested this other arrangement in this letter to Mr. 
Brewer because you thought it was more advan- 
tageous to him? A. Yes. sir. 



vs. Charles P. Brewer, et al. 261 

(Testimony of Harold W. Hilts.) 

Q. What happened in June, June 17th to 20th, 
that caused the arrangement to be changed as of 
July 1st? 

A. We carried everything clear up to the end of 
the year, which made it then January and Febru- 
ary, 1947, and up to the end, or December 31st, 1946. 

Q. Why did you give him a different arrange- 
ment beginning July 1, 1947? Wiry did you go 
back to arrangement as of July 1st? 

A. Mr. Brewer's idea. He wanted it. 

Q. Although the other arrangement, you 
thought, was better, he [181] wanted to go back to 
the franchise arrangement? 

A. Yes. He was better off ultimately. I might 
point out here on the basis of the dollar-for-dollar 
agreement, as we had understood that, to show you 
how much more or, rather, how much Mr. Sibert 
had believed in Mr. Brewer, Mr. Brewer could have 
accumulated a bank account, assets and everything 
else and only drawn a very meager amount for the 
period- of time in which the same amount would be 
sent to us and then, if he wanted to — we were tied 
where we couldn't in any way come out on top; if 
he wanted to, he would have the whole thing and 
pull out. 

Q. Under this 20-80 per cent arrangement you 
were to get 20 per cent of the gross business done, 
whether collections have been made or not? 

A. That is correct. 

Q. Any collections that were not made or losses 
sustained, why, of course, as to those Mr. Brewer 
would have to stand them ? 



262 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

A. No, sir, absolutely not. If he does not make a 
collection or a customer cancels out, leaving a bal- 
ance owing, owing a balance, we don't take 20 per 
cent of that figure; we give it to him as a credit. 

Q. This accounting you made for July, 1947, the 
figures you arrived at there are based on the ac- 
counts receivable'? A. That is right. 

Q. In other words, you figured the gross amount 
of business done; you took 20 per cent of that and 
arrived at the amount [182] which you claim to be 
due. 

A. On the basis of the gross business. Let's say 
that 20 per cent is 

Q. Isn't it a fact that in the early part of July, 
when Mr. Brew r er was informed you people were 
insisting that he should operate from July 1, 1947, 
on the old franchise basis, that he told you he was 
through? A. Absolutely not. 

Mr. Bernard: That is all. 

Redirect Examination 
By Mr. Rankin: 

Q. Mr. Hilts A. Yes. 

Q. the defendant has challenged this fran- 
chise contract on the basis that its operation is un- 
fair. You have, on cross-examination, indicated to 
the Court that it was better to go back on the fran- 
chise than it was for him to proceed on the dollar- 
take-home dollar-pay-company basis'? 

A. Yes. 



v s. Charles P. Brewer, et cd. 263 

(Testimony of Harold W. Hilts.) 

Q. I wish you would explain just the benefit that 
accrued to Mr. Brewer or would have accrued to 
him had lie seen fit to go on with the agreement that 
he had made. 

The Court: I have got to get to the main issue 
in this case. I will hear Mr. Brewer tomorrow 
morning, so T will ask you to lay that aside. As I 
see it, this revolves around the [183] question of 
•credibility, whether this contract was canceled or 
not. You have one more witness, your man Fisher, 
who will testify along the same line ? 

Mr. Rankin : Your Honor, if I have to select as 
between the witnesses, I would rather select another 
one. I would like to use Mr. Fisher, too, but I won't 
insist. 

The Court: Have you another witness? 

Mr. Rankin : Yes, your Honor, I have several 
witnesses. 

The Court: On this key question of credibility, 
whether on June 17th, or whatever it is, this man 
said that he was all through. 

Mr. Rankin: No. There were three people pres- 
ent Brewer, Hilts and Sibert. 

The Court: Tomorrow morning, Mr. Bernard, 
be prepared to put your client on and cover what 
has been covered here today. 

Mr. Bernard: Very well, your Honor. 

(Thereupon, at 5:15 o'clock p.m., an ad- 
journment was taken until Wednesday, Janu- 
ary 21, 1948.) [184] 



264 Paramount Pest Control Service 

Court reconvened at 10:00 o'clock A.M. 
Wednesday, January 21, 1948 

CHARLES P. BREWER 

one of the defendants herein, produced as a witness 
in his own behalf, being first duly sworn, was ex- 
amined and testified as follows: 

Direct Examination 
By Mr. Bernard : 

Q. Where do you reside, Mr. Brewer? 

A. At 4929 N. E. 28th Avenue, Portland, Ore- 
gon. 

Q. When did you move to Oregon? 

A. I moved in April, 1946. 

Q. Did you purchase this property with the idea 
of being a permanent resident here ? 

A. I did. 

Q. Where did you live prior to coming to 
Oregon? A. In Oakland, California. 

Q. How long did you live there? 

A. Three or more years. 

Q. Mr. Brewer, in a general way, what was your 
occupation and business experience before you be- 
came connected with the Paramount Pest Control 
Service ? 

A. I was a mechanic, automobile and heavy-duty 
mechanic. 

Q. Will you relate to the Court how you hap- 
pened to become associated with the Paramount 
Pest Control Service? [185] 

A. Well, my wife, Mrs. Brewer, and the lady 
that is now Mrs. Sibert were friends. She used to 



vs. Charles P. Brewer, et al. 265 

(Testimony of Charles P. Brewer.) 
live next door to us. She had begun to work for the 
Paramount Pest Control Service and through her 
I was introduced to Mr. Sibert and that is the way 
I first got acquainted with Mr. Sibert. 

Q. Did you make application to the Paramount 
Pest Control Service for employment ;? 

A. Not at the time. I never made application 
until after Mr. Sibert had asked me for two or three 
months to go to work for him. 

Q. About when was that ? 

A. Oh, I would say that was some time — I went 
to work for him some time around February. 

Q. 1946? A. Eight. 

Q. Did you own your home in Oakland? 

A. We did. 

Q. Will you tell the Court what you did for the 
Paramount Pest Control Service between the time 
you went to work for them and the time you came 
to Portland, going into whether or not any instruc- 
tions were given you and things of that kind? 

A. I went out from the office with Carl Duncan, 
who was then their instructor, and I went around 
to different accounts, saw how he mixed his bait and 
put it out for rats, also mice and cockroaches. I was 
on one job with him where he sprayed two [186] 
beds for bedbugs. 

After about a week of that, close to a week, then 
I went out selling, by myself, to try and learn what 
there was about selling, and then I worked at that 
about a week, and then I went out alternately with 
one man or another on trouble checks, where they 



266 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

were having trouble. I went along with, them to see 

if I could help out or learn anything. 

Q. You said Duncan would go out and mix bait 
for rats. How would that be done ? 

A. Well, as a general rule, the way of killing 
rats at that particular time was to cut apples and 
carrots, or vegetables with meat in it, small pieces, 
into small pieces, sprinkle on a little poison and go 
and put that out in the corners, behind boards or in 
places where rats would run. 

Q. Was any other information given you as to 
how to mix any of these baits? 

A. No, there wasn't. I asked Mr. Sibert for in- 
formation so I could study up and find out what 
chemical I was handling or what I was doing and 
Mr. Sibert said I wasn't going to take an examina- 
tion in the State of California and I didn't need to 
know all that technical knowledge. 

Q. There have been introduced in evidence here 
certain exhibits which I believe you have examined 
outside the courtroom here. A. I have. 

Q. Was any information ever given to you as to 
any of the [187] formulas that go to make up any 
of the products represented by any of these labels? 

A. No technical information was ever given me. 
They did tell me that on their mouse grain we had 
to take birdseed and sprinkle some poison on it and 
stir it up. 

Q. No. 5-10, ant syrup; was any information 
ever given you as to that? 



No.12170 



Unite b States 

Court nf Ikppmlz 

Ur til* £ftrttt| Olirnrtt 



PARAMOUNT PEST CONTROL SERVICE, a 

corporation, 

Appellant, 

vs. 

CHARLES P. BREWER, individually and doing 
business as Brewer's Pest Control, ROSALIE 
BREWER, his wife, RAYMOND RIGHT- 
MIRE, CARL DUNCAN and EARL MER- 
RIOTT, 

Appellees. 



3faM0rrijrt of %tmtb 

In Three Volumes 

VOLUME II. 

(Pages 267 to 537, inclusive) 



Appeal from the United States Distric^jEfttft »jfl|| 
for the District of Oregon ff" ILsBvls^ 

AHK 4- 1949 

PAUL P. OWIIEN, 



No.12170 



far tlj* Jfontfj (Eirrtnt 



PARAMOUNT PEST CONTROL SERVICE, a 

corporation, 

Appellant, 

vs. 

CHARLES P. BREWER, individually and doing 
business as Brewer's Pest Control, ROSALIE 
BREWER, his wife, RAYMOND RIOHT- 
MIRE, CARL DUNCAN and EARL MER- 
RIOTT, 

Appellees. 



StetttHrrijif nf Sterarft 

In Three Volumes 

VOLUME II. 

(Pages 267 to 537, inclusive) 



Appeal from the United States District Court 
for the District of Oregon 



vs. Charles P. Brewer, et cd. 267 

(Testimony of Charles P. Brewer.) 

A. The information — the only information I 
had on ant syrup was that Paramount was buying 
their ant syrup, and that is the only ant syrup I 
ever saw with Paramount at the time. 

Q. So that there will be no question about this, 
will you run through these exhibits hastily, not tak- 
ing too much time, Exhibits No. 5-1 to No. 5-24, and 
tell any information that was ever given to you by 
anybody connected with the Paramount Pest Con- 
trol Service as to any of these concoctions? Make it 
as rapid as possible. 

A. The sprays that I see here is Fly Spray F2, 
Bed Bug Spray — I was told to buy those from the 
Shell Oil Company and use them. Fungus, I never 
saw — never saw any of their products. 

Q. Refer to the exhibit number, please. 

A. No. 5-6, Insect Powder, that was mixed by 
them, and I never had the formula for mixing it. 

Moth Crystals, to my knowledge, was bought on 
the open market. I never bought any Moth Spray 
F2. , 

Phosphorous Paste, they bought in five-gallon lots 
from jobbers. [188] 

Rat Kilzum; Mouse Grain — Most of them are 
zinc phosphide poisons only that were mixed up as 
we went along or mixed them up on the job under a 
warehouse, for instance. 

This Roach Powder with — I can't even pro- 
nounce it, Exhibit 5-17. I don't know anything 
about that. 



268 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

Sodium fluoride is bought upon the open market. 
Exhibit 5-19. 

The Sodium Fluoroacetate labels are bought, the 
Paramount labels that I have seen on their cans of 
1080, which is the common term for Sodium Fluoro- 
acetate, which is bought from the Montsanto Chemi- 
cal Company in St. Louis, Missouri. 

Termite and Fungus Mixture — That is 5-21. So- 
dium Fluoroacetate (5-22), and Exhibit 5-21 is an 
envelope I never saw. 

Q. Outside of the information that you acquired 
from watching Mr. Duncan put out this bait for 
rodents, was any information ever given to you 
about any of the formulas and processes of Para- 
mount Pest Control Service? 

A, Not to my knowledge was any technical in- 
formation given. 

Q. Was there any other information, technical 
or otherwise, about their formulas? 

A. No, not formulas. 

Q. Jumping for a moment to the time that you 
went into business for yourself in August, 1946, 
have you in the conduct of your business — I mean 
August, 1947 — used any of these products [189] or 
formulas of the Paramount Pest Control Service? 

A. No, I have not. 

Q. Where have you bought the things that you 
have used to carry on your business? 

A. I bought them from different drugstores, 
from different drug concerns, such as McKesson- 



vs. Charles P. Brewer, et ai. 269 

(Testimony of Charles P. Brewer.) 

Bobbins; some articles like mouse traps, and all, I 

bought from Chown Hardware, and spots of that 

kind. 

Q. Did you retain, when you went into business 
in 1946, any of the formulas or products of Para- 
mount Pest Control Service? 

A. You mean August 1st, 1947? 

Q. Yes. A. I did not. 

Q. Coming back now 7 , under what arrangement 
did you come to Portland ? 

A. Under the arrangement of $250 a month 
salary. 

Q. There has been testimony in the case that; at 
some time, in California, you were shown a copy of 
one of these franchises. What is the fact as to that ? 

A. I didn't see a copy of the franchise. I knew 
that there was a franchise that they did give to 
different men in the territories w^here the amount of 
business would support a franchise. 

Q. Did you have any discussion with anybody 
down there about a franchise? [190] 

A. Yes, I talked with Mr. Sibert about one. It 
was a lengthy conversation and he told me that the 
Portland territory was in the red and that he would 
send me up here as manager and, when this business 
got up to $4,000 to $5,000 a month, it would be 
enough to support itself, and then I would have a 
franchise. 

Q. In the meantime you received what? 

A. $250 a month salary. 



270 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

Q. What date did you come to Portland 1 ? 

A. I think I entered the State of Oregon on 
about the 81h day of April. 

Q. Who came with you? 

A. Harold Hilts. 

Q. What was done when you came to Portland? 

A. Well, we got a room, I believe, at the Roose- 
velt Hotel or the Congress Hotel — I stayed in sev- 
eral the next few months; I don't remember which 
was which. Harold Hilts attended to the business 
end of it, as far as I know. In fact 

Q. What do you mean, the business end of it? 

A. He went out and talked to the former mana- 
ger and got the books of the company to pull and 
audit or something. I stayed around the hotel. Mr. 
Glenn Fisher arrived up here around the 9th or 
10th of April, and they called Mr. Taylor, the for- 
mer manager, in for a conference and fired him. Mr. 
Fisher did this. Then Mr. Harold Hilts showed me 
the books. 

Mr. Fisher went back to California immediately 
after [101] that; in fact, that day; and Harold 
Hilts showed me how the books were handled, what 
they looked like, what different books there were, 
that evening until eleven o'clock, and the next morn- 
ing he showed me again, to the best of his ability, 
and the best I could learn, what was going on. Then 
he took the plane back that day for San Francisco. 

Q. Did that leave anybody here for the Para- 
mount Pest Control Service except yourself? 



vs. Charles P. Brewer, et al. 271 

(Testimony of Charles P. Brewer.) 

A. There was one man, Ray Warmuth, that was 
working for them at the time. It seems he was 
working part time. I don't know just what the 
arrangement was. I saw him three or four times 
during the month of April. That is all I saw him. 

Q. Did they have an office? 

A. Not an office; they had a call office where 
phone calls could come in, and Hilts had brought 
down the books and typewriter and office parapher- 
nalia, all of that, this, that and the other, to the 
hotel room and left it there with me. 

Q. You started in to operate from the hotel? 

A. I was in the hotel until I could find an 
office. 

Q. When did you find an office ? 

A. About May 1st. 

Q. Did you sign up a lease? 

A. No, there was no lease on the office. I was 
offered a lease, but I never signed one. 

Q. You did sign a lease on the warehouse ? [192] 

A. I did. 

Q. Yesterday counsel asked Mr. Sibert whether 
or not you had violated any provisions of the fran- 
chise and he said you had taken this lease in your 
name. Will you explain that to the Court? 

A. The lease was made out to Charles P. Brewer, 
doing business as Paramount Pest Control Service. 

Q. Why did you make it out that way? 

A. That was the understanding as to who owned 
the business and how it was named, and my insur- 
ance has been ordered in that name, and that was 



272 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 
the name. Our insurance was in the name of Charles 
P. Brewer, doing business as Paramount Pest Con- 
trol Service. 

Q. Who had ordered that insurance? 

A. That had been ordered from the Oakland 
office, through their agent in Oakland. 

Q. That was prior to the time this corporation 
had been organized, w T as it? 

A, No, they had been organized at the time, be- 
cause my insurance was dated September 1, 1946. 

Q. Where were the poisons and things kept 
when you first started in ? 

A. What I did not have in the hotel, which was 
not much, was out to Taylor's home when I arrived 
here. They wanted it out of there immediately. We 
had to move it to Ray Warmuth's garage. It was 
right on the sidewalk, and had no doors to it, and 
the [193] kids were playing in it and causing trou- 
ble, and I tried to find a warehouse for it and I 
finally got it into Crosby's Garage until I could find 
room in a building where I could locate it, other 
than in somebody's personal garage. 

Q. You have testified you were to be paid $250 
a month until business got to, you say, about $4,000 
or $5,000 a month ? A. I was. 

Q. At any time, up to the time you severed 
your connection, did the business reach that 
volume? A. It never did. 

Q. What was the volume of business in the year 
from July 1, 1946, to June 30, 1947, in round 
figures ? 



vs. Charles P. Brewer, et cd. 273 

(Testimony of Charles P. Brewer.) 

A. Well, I don't know the division of the entire 
one year, but the thirteen months, the entire time of 
the franchise, it hit around $35,000, in round figures. 

Q. Did you put any money in the business when 
you first started in here ? 

A. Yes, I opened the bank account at the First 
National Bank with $1,000 of my own personal 
money to carry the payroll and expenses until it 
would get some money into the organization. 

Q. When did Mr. Duncan come up ? 

A. The first time he came up was May, around 
May, somewhere around May 10th. 

Q. What did he do while he was here? 

A. He trained three days — He was here around 
eight to ten [194] days in Oregon, but he trained 
Rightmire three days and then he left here on the 
Eastern Oregon service run and serviced through 
up the Columbia River to the Idaho line and back 
through Burns and Bend, Oregon, and back into 
Portland. 

Q. Then, when did he come later? 

A. I believe it was in October or November, the 
next time he came up. 

Q. What did he do from that time on ? 

A. He was here with me, training men in the 
southern part of the state that I couldn't go down 
there and train. He was down there for two weeks 
or three weeks. I don't know just the exact time. 
He went from there up to Washington and he 
worked up around Spokane, Washington, for the 



274 Paramoimt Pest Control Service 

(Testimony of Charles P. Brewer.) 
Paramount Pest Control Service for a period of, 
T don't know, two weeks to a month or six weeks. I 
don't know. 

Q. By the way, there were some magazines 
marked as exhibits in this case, purporting to be 
devoted to insect control and so forth. Those are 
not put out by the Paramoimt Pest Control Service, 
are they? A. No, they are not. 

Q. Are they ever sold to the public? 

A, They are sold to the public. 

Q. In dealing with these other people from 
whom you buy in your business, can you get data 
from them as to insect control and rat control? 

A, Oh, yes. The Zehrung Chemical Company 
will give you any information you want on the 
control of any of them insects. 

Q. Can you tell the Court, in round figures, 
about how many new accounts you procured in the 
thirteen months you were with Paramount Pest 
Control Service? 

A. I would say between four and five hundred 
accounts. 

Q. About how many accounts did they have 
when you came here? 

A, I would say, not calling Safeway Stores as 
all individual ones, T would say somewheres around 
100 to 150. 

Q. Was there, at any time, any complaint made 
to you by anybody connected with Paramount Pest 
Control Service as to your conduct of their business 
in the State of Oregon? 



vs. Charles P. Brewer, et al. 275 

(Testimony of Charles P. Brewer.) 

A. No. They always thought that I was doing a 
wonderful job up here, and bragged on this as being 
one of the best territories in the organization. 

Q. How^ did it happen, Mr. Brewer, that you 
transferred from this $250 a month to the signing 
of this franchise? 

A. Mr. Sibert came up here the latter part of 
June, I would say after the 25th, some time, and he 
said — he stayed out at our home; that was a com- 
mon occurrence between us — and he told me at my 
home that he was going to let me have a franchise. 
I said I did not want any part of a franchise ; the 
business is in the red; and I could not support a 
franchise, and he said, "I have got to dump it." He 
said, "I have got to dump the business. We are 
incorporating in the State of California the first 
day of [196] July, and the State of Oregon is op- 
erating in the red, and we cannot incorporate if we 
take a portion of our territory operating in the 
red. He told me that I would have to take a fran- 
chise out, or I was out at that time. 

Q. At that time had you bought your home in 
Oregon? A. I had bought it in Oregon. 

Q. And you had sold your home in Oakland? 

A. I had sold my home in Oakland and moved up 
here, all of our furniture up here and 

Q. In operating under this franchise, did you 
have anything to do with fixing the prices of the 
merchandise that you had to buy from the company ? 

A. None whatever. If we ordered anything from 
Paramount, they sent us a bill for it. 



276 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

Q. Did you need an automobile in the transac- 
tion of business? A. I did. 

Q. Did you request them to furnish you one? - 

A. I asked Mr. Sibert about an automobile, if 
•they could help me out in getting one, and he said it 
was my business; if I wanted an automobile I would 
have to go and buy it, so I did. 

Q. Did you have an automobile of your own? 

A. I had one of my own, personally. 

Q. Was that used in the business? 

A. It was used by me in the business. 
►. Q. Was anything furnished, in the operation of 
this business, [197] by the Paramount Pest Control 
Service? 

A. Well, if I needed some sodium fluoride, I 
would order from them, but if I wanted some 1080 
I would write them and tell them to send me some, 
which they did, and to bill me for it. They sent me 
any office stationery or anything I needed, with a 
statement Tor it, of course, from themselves or from 
the printing company, 

Q. You say that the gross income for the thirteen 
months was $35,000. Can you tell the Court, in 
round figures, the expenses of operation, exclusive 
of any moneys sent to the Paramount Pest Control 
Service on the franchise ? 

A. It was somewhere around $29,000 to $30,000, 
was the expenses. 

Q. That would leave a net profit of $5,000? 

A. Approximately, yes. 



vs. Charles P. Brewer, et al. 277 

(Testimony of Charles P. Brewer.) 

Q. If you had to pay Paramount Pest Control 
Service 20 per cent of $35,000, you would be $2,000 
short? A. I would have been. 

Q. When did you first discuss with anybody con- 
nected wdth Paramount Pest Control Service any 
change in the terms of this franchise % 

A. Right during the time, after Thanksgiving 
in November, I talked with Mr. Sibert in the Oak- 
land office. I told him that the business could not be 
operated on a 20 per cent gross to them ; that it 
would cost me more and everything else, and I would 
not operate that way. [198] 

He told me that he would try to get it back to 
where it would be 50-50 for us, and I said that 
would be all right, and he called Harold Hilts into 
his office, or Mr. Hilts walked into the office, one or 
the other, right at that particular time, and Mr. 
Sibert told Hilts that he could make that change, 
whereas it w T ould be a 50-50 proposition, even on the 
net profits — I don't remember that word "net prof- 
its" used — but it w T as a 50-50 proposition, and that 
they would change it over to that. 

Q. Was anything said or discussed as to how 
long that would run or whether it would terminate 
at any period? 

A. Mr. Sibert asked me if I wanted it to run 
until the first of the year, for one year, or when, 
and I said, "As far as I am concerned, it can run 
from now on, as long as the contract is in force," 
and he said, "All right. If that is the way you 



278 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

want it," and I said, "That is the way I w^ant it," 

and he said, "That is the way it will be." 

Q. He said he had some talk with yon up here 
in September about this thing and had forgotten to 
report it to those men until December. Did you 
ever discuss it with Mr. Hilts at all? 

A, Not to my knowledge was anything discussed 
in September. 

Q. When, with reference to that time, was there 
any question or discussion with anybody as to this 
change in the terms of the franchise ? 

A. The only time anything was said about it 
whatsoever was when Mr. Hilts pulled up an audit 
statement from the books — pulled [199] an audit 
statement from the books — around September 13th 
or 14th and presented it to me. 

Q. Everything, as far as you knew, went along 
satisfactorily until some time in March? 

A, It was. 

Q. When did Mr. Hilts see you in March? 

A. I don't remember whether it was the 13th or 
14th. It was probably the 13th or 14th. 

Q. Where was it? 

A. At the office in Portland here. 

Q. Tell the Court what happened here at that 
time, at that meeting with Mr. Hilts? 

A. Mr. Hilts pulled up a balance sheet or rough 
draft of the books and told me that I owed the 
Paramount Pest Control Service $994 for January 
and February's operation, and it seemed to me — it 
made me so mad I couldn't talk. 



vs. Charles P. Brewer, et al. 279 

(Testimony of Charles P. Brewer.) 

I turned to my wife and I said, "Make them out 
a check." She looked at me as though I was silly 
and I said, "Make out the check," and she made it 
out quick and I handed it to him. 

A few minutes later I got my things and I said, 
"I will drive you to the airport," and on the way 
to the airport I told Hilts that I was completely 
done with Paramount Pest Control Service. 

Q. Was that this check for $994.25 1 

A. It is. 

Q. Now, this audit that he showed you as a basis 
for the money [200] they were claiming you owed, 
w r as that audit made on the 50-50 basis, or was it 
made on the 20-80 basis ? 

A. It was made on the 20 per cent of gross 
business done. 

Q. Can you turn to Exhibit 29 in that bunch of 
exhibits? That is the letter of March 15th from 
Harold Hilts. A. I have it. 

Q. Do you have it front of you'? 

A. * Yes. This is the one he sent me. 

Q. Can you tell when Harold Hilts left Port- 
land ? 

A. He left here on Friday evening, around four 
or five o'clock in the afternoon, rather. 

Q. That would be on March 13th? 

A. I believe the 13th or 14th. I have no idea 
for sure. 

Q. I think the calendar will show March 13th. It 
was at that time you told him that you were 
through? A. It was. 



280 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

Q. I think the 14th was Friday. I think the 
calendar shows 15th was Saturday. When did you 
receive this letter, this letter which is marked Ex 1 
hibit 29? 

A. I received it at nine o'clock in the morning 
at my home, airmail special delivery. 

Q. Sunday morning'? 

A. Sunday morning. 

Q. The third paragraph reads: — The first para- 
graph, I should say: "Enclosed is a statement of 
your account for 1946, also [201] January and Feb- 
ruary of this year. 

"You will note that this splits everything across 
the board for 1946 and we both come out with 
$1,479.65 and you still have your $1,000 investment 
in the business. 

"For January and February there is a net profit 
of $1,016.55 with the franchise out of it, now you 
have drawn $512.22 for both months; if we take 
$512.22 like you did that will be your franchise for 
January and February." 

Did that differ from the audit that he had sprung 
on you on the 12th or 13th? 

A. It absolutely does. 

Q. Why did you go on then with the business, 
after you had told him you were all through? 

A. Because he wrote me this letter and explained 
in here that they would split across the board, and 
that Sibert had tried to explain it to him just before 
he came up here but he didn't understand. That is 
what it says here. 



vs. Charles P. Brewer, et al. 281 

(Testimony of Charles P. Brewer.) 

Q. All right. When was the next discussion you 
had with anybody about the way the money was to 
be divided between you? 

A. I think maybe in April. Hilts and I may 
have mentioned it some, of course, around the office 
there, but there was no great discussion on it at that 
time. 

Q. When was there any discussion to the point 
that there was any difference between you*? 

A. The first difference as to moneys or anything 
was down in [202] Oakland, right at the last, the 
controversy of June. 

Q. Did you see Mr. Hilts'? He said he saw you 
between the 17th and 20th of June. 

A. Why, I saw him the 17th of June. He and 
Mr. Sibert came here but he did not pull an audit 
of the books at that time. He had a recap of the 
business done, the income and expenses. He made 
out a blank statement to turn in to the bank and 
then' he and Mr. Sibert went on to Seattle. I gave 
Harold Hilts a key to the office and files so that he 
could come into the office and pull an audit of the 
books while I was in California. 

Q. In other words, an audit was not made 

A. An audit was not made until after I had left 
Portland. 

Q. You said a bank statement, a financial state- 
ment, was prepared for the Bank of California. 
Who prepared that? 

A. Mr. Hilts prepared it. 



282 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

Q. I am referring now to Exhibit 77. I will ask 
you who did the typewriting? 

A. Mr. Hilts did that. 

Q. What — For what purpose was that exhibit 
prepared ? 

A. To present to the bank to establish credit for 
me so I could borrow money from the Bank of 
California. 

Q. For what purpose? 

A. To give to him. 

Q. When had anybody requested that you bor- 
row money to pay on your indebtedness to them? 

A. Mi*. Sibert had called me some time the latter 
part of April or the first of May from Seattle and 
told me that he was in a pinch for money and would 
I please go and borrow some money and give to him. 
He wrote me a letter from Oakland shortly there- 
after, which is in the files at the office, asking me to 
go down 

Mr. Rankin: Just a moment, The letter is the 
best evidence, of course. 

A. All right. 

Q. (By Mr. Bernard) : Never mind. Just a mo- 
ment, please. This Exhibit 77 was prepared by Mr. 
Hilts? A. It was. 

Q. For the purpose you have indicated? 

A. Yes. 

Mr. Bernard : I offer this in evidence as Defend- 
ant's Exhibit No. 77. The defendants' exhibits have 
not been offered yet. 

The Court : Is that a new document ? 



vs. Charles P. Brewer, et al. 283 

(Testimony of Charles P. Brewer.) 

Mr. Bernard : No ; it is a pre-trial exhibit. 

Mr. Rankin : It was reserved — a number was re- 
served at the pre-trial for it, but we have not seen 
the exhibits before this morning. I won't take the 
time now, but I want to reserve our objections until 
later. You want to use it? 

Mr. Bernard : I want to use it, yes. 

The Court: Admitted. 

(Financial statement of Charles P. Brewer 
to [204] the Bank of California thereupon re- 
ceived in evidence and marked Defendants' Ex- 
hibit No. 77.) 

Q. (By Mr. Bernard) : I notice this is made 
out in the name of Charles P. Brewer and it says, 
"Cash in Bank of California, $75.10." Was that the 
bank account that you handled the business through ? 

A. That was the bank account, the bank balance 
at the end of May. 

Q. " Accounts Receivable, $3,624.58." Were 
those -amounts owing you in your operation for the 
Paramount Pest Control Serviced 

A. That was due and payable on the books. 

Q. "Real estate and buildings, $5,250." What 
real estate and buildings were represented? 

A. It would be my home. 

Q. "Autos and trucks, $1,836." Does that in- 
clude your automobile'? 

A. My personal automobile and Plymouth coupe 
that I bought. 



284 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

Q. When did you buy your personal automobile? 

A. Id October, 1942. 

Q. " Other assets, personal furniture, $2,100." 
Ts that the furniture at your home? 

A. That is. 

Q. "Accounts Payable, $2,759.63." Is that the 
money that 3^011 owed Paramount Pest Control 
Service? A. That is. [205] 

Q. Was that money that they wanted you to 
borrow to pay? Was that the account, $2,729.63, 
that they wanted you to pay? A. It is. 

Q. Did you borrow money from the Bank of 
California? A. No, I didn't. 

Q. Why not? 

A. Because I would not go into debt for the 
Paramount Pest Control Service from California. 
Ted told me he would never press me for money 
unless this office could pay off; until it could pay 
off he would not press me for money, and I was not 
going to go into debt like Osborn and a lot of other 
managers up here had, and go broke because of it. 

Q. When they informed you — When were you 
informed, rather, that you were going to be required 
to go back on the 20-80 basis as of July 1st? 

A. Mr. Sibert told me that just prior to July 1st. 

Q. Where? 

A, I don't remember the exact spot, whether it 
was at his home or in his office in Oakland, Cali- 
fornia. 

Q. What were you told about that? 

A. I was told that I was going back on the 20 
per cenl basis; that he had worked out on a piece of 



vs. Charles P. Brewer, et al. 285 

(Testimony of Charles P. Brewer.) 
paper a budget whereby I could operate and make 
more than $850 a month and the firm $600, and that 
would be a profit on a $2500-a-month business. I 
couldn't see where I could make that much by trav- 
eling clear to [206] Boise, Idaho, and below Klam- 
ath Falls, Oregon. 

Q. What did you tell him? 

A. I told him it would not work and that I 
would carry the business for the month of July. 

Q. Did you tell him what you would do at the 
end of the month of July? 

A. I didn't tell him right then what I would 
do. I told him I would carrv the business for the 
month of July. 

Q. Did you agree at any time to go back on the 
20-80 basis ? 

A. I never agreed with them. They put me 
right back on the 20-80 basis. 

Q. After you wrote this letter of resignation, 
did Hilts come up here? 

A. Yes, he came up here around the first day of 
August. 

Q. Will you tell what you did with Hilts as to 
turning over to him any of the property of the 
company that you had been using in the operation of 
this business? 

A. Mr. Hilts and I went down to the office and 
got paper and we started in to take an inventory of 
the supplies around the office. We were both writ- 
ing down, so we decided to make that simpler, and 



286 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

he wrote it clown and I would call it off, and we 

would check it. 

I called off all the supplies and equipment around 
the office. Then we went out to the warehouse, went 
in there, at Fifteenth and Marshall, and took an in- 
ventory of all supplies [207] and equipment there. 

I told Hilts that there was a spray trailer and 
spray machine at my home, and we would go out 
there and get those, and we went out there and he 
saw the spray trailer. I told him what it cost and 
where it was. The spraying machine I couldn't find. 
It was not there, and there was a few little items — 
a little bit of bait or maybe a little sugar or some- 
thing like that, that had been laying around. We 
gathered that up and I gave it to Hilts, and that 
was noted in the inventory. 

I told Hilts I would either get them a spray ma- 
chine or I would find it, and the spray trailer they 
could have had. 

Then, the next day, or that evening, Hilts had 
gone into the warehouse and taken a spray machine 
or something out of the warehouse, and I don't know 
whether he had done a job with it or not, but when 
I found out about it through the management of 
the building I told him they were not allowed in that 
office any more until I had a definite statement be- 
cause every time I asked, "What kind of a settle- 
ment are you going to make with me?" he said, 
"You know we will do just what is right by you." 
I said, "What kind of a settlement?" And he said, 



vs. Charles P. Brewer, et ah 287 

(Testimony of Charles P. Brewer.) 
"We will settle like we said we would/' and that 
is all lie would say. I locked up the warehouse 
until they would make some kind of a definite state- 
ment as to the settlement. 

Q. These supplies, equipment and things you 
turned back, had you already been charged for them 
by the company? [208] A. I had. 

Q. All right. Going to this settlement that you 
wanted to have 

A. That was on a Saturday, I believe. I believe 
it w r as Saturday afternoon. I am not sure of the 
exact time, but Mr. Fisher, Wendy Fisher, and Har- 
old Hilts were there at the time. I told Mr. Celsi 
that they were not allowed in the building until I 
said so. Mr. Celsi told them that he had leased the 
building to me and when I said they could go in, 
they could. I believe it was Saturday afternoon. 
They were locked out of there until Monday. 

Monday Mr. Sibert came up and he argued back 
and forth about forty-five minutes before he defi- 
nitely said he would settle with me, pay me any 
moneys due and payable to me, and pay me for my 
supplies and equipment. 

Q. Did you turn everything over to him? 

A. Turned everything over except the spray 
trailer. It was hauled out and parked on the street. 
I left it there for them to come and get it any 
time they had a place to park it. The one spray 
machine — I told them I would bring it down to him. 
I didn't have it — it was out; one of the boys had 
it; and I got it later, and I didn't take it down to 
them. 



288 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

Q. Did you make a demand that they have an 
audit at that time? 

A. I told Mr. Sibert that if these books were 
audited by a Portland accounting firm and we set- 
tled on that basis, then he [209] could have the 
warehouse and the supplies and the rest of it, but 
that they could not take these books to California 
for an audit down there. 

The next morning Mr. Sibert called in Mr. Young, 
I believe, of Jones and Young, an accounting firm, 
to audit the books and before he could get started 
Mr. Sibert said something to him and he got mad. 
He called up Sawtelle, Goldrainer & Company, and 
they went down and completed an audit of the 
books. 

Q. That has been known in these proceedings 
as the Sawtelle Goldrainer & Company audit ? 

A. Yes, sir. 

Q. Exclusive of this $1,000 that you put into 
the business, what were your drawings from this 
company for the thirteen months that you were with 
them? 

A. Other than getting back the thousand dol- 
lars that I put in to carry it forward and the ex- 
penses that was paid, I drew thirty-two hundred 
and a few dollars. 

Q. Some testimony was given in this case that 
ihey paid for you to take an airplane trip to Cali- 
fornia. Do you recall that? 

A. They did not pay for that airplane trip. 
It was around the 25th day of June. Mr. Sibert — 



v s. Charles P. Brewer, et al. 289 

(Testimony of Charles P. Brewer.) 
Mr. Hilts and I had called him. He did make a res- 
ervation so I could go on the same plane Mr. 
Sibert went on, but Checks numbered 398, 399 and 
400 show where I drew altogether $200 just a day or 
so before I left. I used that to buy my tickets and 
met Mr. Sibert at the airport [210] with my daugh- 
ter and we got on the plane and flew to California 
and I bought those tickets. 

Q. Mr. Brewer, about when did you decide to 
go into business for yourself? 

A. It was after the 15th of August and some- 
where around, I would say, around the 20th or 25th, 
of July, pardon me. 

Q. There is an exhibit here showing that your 
wife first filed an assumed name certificate and 
later you did. Why was it that your wife signed 
the first one ? 

A. I was still working with Paramount and I 
was out helping to service calls and continuing to 
work for them, and I did not feel like taking the 
time to go and do it. 

Q. Did you attempt to devote your best efforts 
to the Paramount Pest Control business up to the 
first of August ? 

A. I devoted every minute to Paramount up to 
August 1st. 

Q. Mr. Hilts testified that he saw you at the 
Roosevelt Hotel July 31st. Do you recall that'? 

A. I do not recall for sure whether he did or not. 



290 Paramount Pest Control Service 

(Testimony of diaries P. Brewer.) 

Q. Well, lie said in substance that he asked you 
what had happened and you said you could not make 
a go of it, and that Eightmire was quitting, wasn't 
going to stay in the extermination business, that 
you promised to give him Rightmire's address and 
never did. Does that call the matter to your atten- 
tion? A. There was a meeting of that kind. 

Q. Tell what your recollection is of what went 
on? [211] 

A. I don't remember how I happened to go to 
the hotel. I do remember now that he did ask me 
for Rightmire's address. I told him I would get it 
from the office. I didn't find it at the office and I 
didn't call him back. He called me up at my home 
and asked me what the address was. I didn't know 
the name of the street. I knew where it was but 
I didn't know the name of it, nor the address; and 
the next day, after the inventory was taken, and 
we were out to my home, he asked me where Ray 
lived. I told him I didn't know his address but I 
knew where it was, and he said, "Will you draw me 
a map so I can find it?" And I said, "Yes," and I 
took a piece of paper and drew out a map to show 
him where the Safeway Store was on the corner 
and showed him the house on the map, where it 
was, Ray Rightmire's home. 

Q. There is some evidence that shortly before 
the 1st day of August there were three cans of this 
10S0 returned from Seattle. 

A. There were two cans returned to me from 
Seattle, because Mr. Osborn had requested two cans 



vs. Chcvrles P. Brewer, et at. 291 

(Testimony of Charles P. Brewer.) 
about a month before that, that he was in need of 
some what is known as 1080 in a hurry and would 
I ship it to him, and I shipped it to him airmail 
that day, and in July some time I wrote Mr. Os- 
born and told him I wanted the two cans or the 
amount that I had paid for them and he sent them 
back to me, and w T hen I turned over these supplies 
to Paramount there were at least three cans of 
1080 on the shelf for them. [212] 

Q. Then, from August 1st on, you did not use 
any property of any kind or character belonging 
to Paramount Pest Control Service in connection 
with your own business ? 

A. I never used that spray, that "Hi-Fog" 
nor the trailer. N - 

Q. Or any other of their products'? : !• • - 

A. None of their products whatever. • • « 

Q. Did you retain in your possession any listis 
of their customers'? A. I did not. 

Q. How did it happen that Rightmire and Dun- 
can came to work for you, and Merriott, too ? 

A. Well, Mr. Rightmire was hired by me after 
being interviewed by Mr. Sibert. 

Q. I mean, by you after August 1st. How did 
you happen to hire Duncan, Rightmire and Merriott 
to work for Brewer's Pest Control 1 ? 

A. I offered Ray Rightmire a job August 1st 
or thereabouts, and he came to work for me. I of- 
fered Earl Merriott a job around August 1st and he 
came to work for me, and around the 18th or 20th 



292 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 
or somewhere around there I offered Carl Duncan 
a job, as he said he had to work for a living, so he 
went to work for me. 
•Mr. Bernard: I think you may cross-examine. 

Cross-Examination 
By Mr. Rankin: 

Q. Referring to the poisons that you described, 
from the exhibits that have been admitted in evi- 
dence, you say they are all those poisons, common 
poisons, you can buy on the open market, anyplace ? 
i A. Most of them are that I know of. 

Q. You put quite a limitation on your answer. 
How many of them do you know of? 

A. These that have Paramount labels on them 
I couldn't buy on the market. You can buy a sim- 
ilar product but not these labels, but at least the 
ingredients, as I read the ingredients here, on the 
open market. 

Q. When you say "as T read the ingredients," 
do you refer to the active or inert ingredients'? 

A. I mean the active. 

Q. You know enough about pest control to know 
that active ingredients are required, at least by the 
laws of Oregon and California, to be placed upon 
the can or the container? 

A Tt is according to whether you are selling or 
using. We do not sell. We do not have labels for 
tny poisons that we handle because we do not sell 
poisons. 



vs. Charles P. Brewer, et al. 293 

(Testimony of Charles P. Brewer.) 
Q. Would you answer my question, please*? 
A. What was the question? 

(Question read.) [214] 

A. To my knowledge, they are not required in 
the State of Oregon to be placed on the can unless 
it is for sale. 

Q. If you manufacture it, even for use in your 
own business, labels are required to be placed on 
the cans? 

A. To my knowledge, it does not. 

Q. Does it in California? 

A. I don't know the California law. 

Q. Your statement was you could buy on the 
open market — I recall this instance — moth crystals; 
Can you buy the same poison in moth crystals on 
the open market as it is put out by Paramount Pe.st 
Control Service as "Moth Crystals"? 

A. I don't know what Paramount puts out. I 
know I can buy Paradichlora Benzene Crystals on 
the open market. 

Q. Do you know any of the formulas under 
which Paramount puts out any of these poisons as 
they appear on the labels? A. I do not. 

Q. So you could not honestly state, then, could 
you, that you can buy this same product on any 
common market? 

A. I can buy the active ingredients on the com- 
mon market. ; 

Q. You mean by that you can buy ingredients 
like those that are used and named in the Para- 
mount labels? A. Yes. 



294 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

Q. Now, when did you get the 1080 from Mr. 
Osborn in Seattle, Washington? 

A. It was some time, I believe, after the 15th 
day of July, 1947. [215] 

Q. You got two cans? 

A. I got two cans, yes. 

Q. You claim that they were redelivered to 
Paramount? A. They were. 

Q. Who received them? 

A. Harold Hilts, in the inventory of the equip- 
ment in the warehouse at the time. 

Q. Who delivered them to him ? 

A. I did. They were sitting on the shelf and I 
called them off to him, and he saw that they were 
there. 

Q. Have you at any time since July, 1947, used 
1080? A. I have. 

Q. Where did you get the 1080? 

A. T got it from the Monsanto Chemical Com- 
pany. 

Q. Direct? 

A. I got one can from the Fish and Wild Life, 
and I ordered my others from Monsanto. 

Q. Have you got any communication that will 
show you ordered it from this company? 

A. I don't have with me. 

Q. Have you got any communications anywhere ? 

A. T got a letter from Monsanto, yes. I don't 
know just what you mean by order. I wrote them 
and told them I wanted it and they wrote me back 



vs. Charles P. Brewer, et ai. 295 

(Testimony of Charles P. Brewer.) 
instructions just how to get it, and I have a copy of 
my insurance made out by the insurance company 
to [216] Monsanto for it. 

Q. Just answer one question at a time. Have 
you in your files anywhere this order to Monsanto 
for 1080? 

A. No, I wouldn't say that I have. If I wrote 
them a letter to send me some, I didn't keep that 
letter in my files. 

Q. You don't keep any record of your orders of 
poisons as deadly as 1080? : 

A. I don't need to keep a record of the order. 

Q. I didn't ask you whether you needed to or 
not. I asked, did you? 

A. I wouldn't say for sure. I don't believe I 
have. 

Q. Have you got any letters or anything of rec- 
ord to show whether or not Monsanto Chemical 
Company sent you any poison known as 1080? 

A. What do you mean, record? 

Q. Don't you know 7 what a record is after you 
have been through the preparation of this case? I 
mean a paper or any statement, typewritten, or 
written by hand, that says, from this chemical com- 
pany, that "We are sending you so much of the 
poison commonly known as 1080? 

A. I have no such thing that I know of. 

Q. Now, you say you got a can from Wild Life ? 

A. Yes. 



296 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 
< Q. How did you get that can? 

A. I went up and asked them to give me a can 
of it. [217] 

Q. Where are they located? 

A. Their main offices are located in the 
Weatherly Building. 

Q. Here in Portland'? A. In Portland. 

Q. When? A. The first day of August. 

A. I would not remember his name. 

Q. Do you mean to tell this Court you can buy 
a can of 1080 from Wild Life? A. I can. 

Q. How much did you pay for it ? A. $8.00. 

Q. $8.00 for a can? 

A. No, $4.00 for one can. I meant one pound 
when I said one can. 

Q. You got one pound, now. Your statement is 
now 'that you got one pound of 1080 from Wild 
Life? A. I did. 

Q. What? A. The first day of August. 

Q. What year? A. 1947. 

Q. And you paid $4.00 for that can? 

A, I paid $8.00 for that pound. 

Q. $8.00 for that pound? A. Yes. [218] 

Q. Did you put up any bond with them in con- 
nection with that purchase of it? 

A. With Pish and Wild Life? 

Q. Yes. A. No. 

Q. They just sold it to you direct? 

A. They have done that to several exterminators 
in the State of Oregon, including myself. 



vs. Charles P. Brewer, et al. 297 

(Testimony of Charles P. Brewer.) 

Q. Did you make any representation to them 
about your use of it? 

A. I told them I was familiar with the use of it. 

Q. And you did that for the purpose of serving 
customers of yours who had formerly been cus- 
tomers of Paramount Pest Control Service? 

A. I did it to get poisons to serve customers of 
Brewer's Pest Control. 

Q. Who had formerly been customers of Para- 
mount ? 

A. Some who had not been. 

Q. But some who had been? 

A. Some who had and some who hadn't. 

Q. Been customers of Paramount Pest Control 
Service ? A. Right. 

Q. You stated that the company was in the red, 
I mean, that Paramount Pest Control Service was 
in the red when you came here ? [219] 

A. That is what I was told. 

Q. You do not claim the truth of the matter for 
yourself, then? 

A. If it isn't, they lied to me. 

Q. Who was it that lied? 

A. Harold Hilts and T. C. Sibert. 

Q. Did you make any effort to ascertain if it 
was true? 

A. I did not pull an audit of their books to see 
if it was true. 

Q. Did you make any effort to ascertain the con- 
dition of your company? A. Yes. 



298 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 
Q. For the two months after you earned 
A. I don't understand that. 

(Question read.) 

A. Yes, it was in very bad condition. 

Q. You mentioned Mr. Taylor. Do you know 
whether he had a contract or not? 

A. I don't know anything about his relationship 
with Paramount. 

Q. You spoke about Mr. Osborn had gone broke 
on his contract. 

A. I don't know. 

Q. You said that he had gone broke. 

A. I said that they got him in debt. 

Q. Tf I recall correctly, you used the word 
" broke." 

A. Well, I don't know what their relationship 
was now, but T. C. Sibert asked me, after I made 
the trip to California in November, [220] to go to 
Seattle and see about it, that Osborn was taken back 
off his franchise and put on a $250 a month drawing 
account, because he was over in debt, and Mr. 
Sibert asked me to go up there, which I did. 

Q. You went up there? A. T did. 

Q. Did you make a success of Mr. Osborn 's 
business? 

A, I didn't make any success of anything up 
there. 

Q. Nor here either, did you? A. Yes. 

Q. Is Mr. Osborn still with the company ? 

A . To the best of my knowledge, he is. 



vs. Charles P. Brewer, et ai. 299 

(Testimony of Charles P. Brewer.) 

Q. You said, I believe, on your direct examina- 
tion you had made no list of the customers that you 
had formerly served when acting as agent for the 
Paramount Pest Control Service? 

A. I made no list from there, to take away from 
there. 

Q. As a matter of fact, you took the books home, 
didn't you? A. I didn't. 

Q. You took them home and made a list from 
them, both as to the account and as to the name of 
the patron? A. I did not. ' • u 

Q. Where did you get the list that you compiled 
in your answer, when you identified 141 former 
customers of Paramount taken over by yourself? 

A. What do you mean by list or listing? I took 
them from a list [221] that I made up from our 
books, Brewer's Pest Control. : '• . 

Q. How did you know, then, that they were for- 
mer patrons of Paramount Pest Control, unless you 
had some record? A. By memory. 

Q. You remember 141 accounts of Paramount 
Pest Control Service? 

A. What do you mean, remembered 141? 

Q. I am just using that word. What did you 
mean by remembering? 

A. You are asking me about the list that I made 
that you called for in the notice to produce ? 

Q. Yes. 

A. Is that the one you are referring to ? 



300 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

Q. Yes. 

A. I took those from Brewer's Pest Control 
books. 

Q. How did you know they were also patrons 
of Paramount Pest Control Service % 

A. Because we had been servicing them, accord- 
ing to my memory, over eighteen months period of 
time. If a name is called, I can at least remember 
the name. 

Q. Will you now name the 141 former patrons 
of Paramount Pest Control Service? 

A. If you will put the 141 names in front of me 
where I can see them, I can. 

Q. You cannot remember them without you have 
aid from your own records ? 

A. I can't remember 141 names here at the pres- 
ent moment, unless [222] you put a list of people in 
front of me. Then I can call off those that we had 
serviced as Paramount. 

Q. You had your own records when you did call 
off these names? 

A. I didn't have to have my records. If I re- 
member a name, I can 

Q. Then, the reason that you remember, if you 
do remember, that you had 141 names is because 
your business is comprised almost entirely of those 
patrons that you had served under the Paramount 
Pest Control Service? 

A, No. A big \wv cent of our customers had 
never heard of Paramount Pest Control Service. 



vs. Charles P. Bretver, et al. 301 

(Testimony of Charles P. Brewer.) 

Q. What per cent? 

A. I didn't figure the percentage. 

Q. Do you mean to tell the Court that you do not 
know w T hat percentage of your business was from 
these Paramount Pest Control people, and what 
percentage was not? 

A. I don't know the percentage of what was 
formerly Paramount and what was not. I was hot 
interested in percentages. 

Q. Would you say that a majority of your cus- 
tomers w T ere also customers of Paramount? s < 

A. A majority of them. 

Q. What would that amount to, between "80 and 
85 per cent? A. I would say no to that , ii 

Q. Referring to the franchise, it is your position 
that the franchise went on as it was written until 
Thanksgiving in the [223] following November T 

A. It did. 

Q. Nobody made any change in it during that 
period of time? A. None whatsoever. 

Q. When did you first see the franchise, the 
form of franchise agreement ? 

A. Some time after the 25th of June, 1946, when 
Mr. Sibert took a franchise or a copy of some fran- 
chise that they had, to copy off one so that they 
could have it for me to sign. 

Q. Did you read it then? 

A. I read it, yes. 

Q. You signed it w 7 hen? How much later? : 

A. It was signed effective July 1st. I wouldn't 
know the exact date, somewhere between three and 
four days before that. 



302 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

Q. Was it signed by Mr. Fisher at the time that 
you signed it? A. No, it wasn't. 

Q. Did you see anything which was unfair in 
your contract at the time you read and subsequently 
signed if? 

A. I saw everything unfair about it. 

Q. Why did you sign it? 

A. I was out of a job if I did not sign it, and 
I was in a strange town. 

Q. Your position is that you claim you were 
forced to sign that? A. Practically, yes. 

Q. Under duress? [224] A. Practically. 

Q. Why didn't you plead you were under duress, 
if you were? 

A. I did. He told me I would either sign it or 
else I was out of a job. 

Q. Why didn't you plead it in your complaint 
here, your answer rather? 

A. As far as I know, I did. 

Q. Of course, you know you did not. 

Mr, Bernard: I don't think counsel should argue 
with the witness. I object to it. 

The Court: Go ahead. 

Q. (By Mr. Rankin) : When did you first con- 
sider that this contract was no longer an agreement 
that you had to live up to? 

A, I first considered it as of no value whatever 
to me, or them, around July 25th somewhere, some- 
where around there. 

Q. What year? A. 1947. 



vs. Charles P. Brewer, et al. 303 

(Testimony of Charles P. Brewer.) 

Q. On July 25, 1947, that is about the date you 
sent in your resignation 1 ? 

A. That is the date I sent in — around that date 
that I sent in this letter confirming my resignation. 

Q. At that time you had come definitely to the 
conclusion that the contract was not one that was 
binding on you or Paramount? 

A. I considered it not worth the paper it was 
written on. 

Q. Did you so consider it in February or March 
of 1947? [225] 

A. I did, at the time Harold Hilts told me I was 
going to have to pay 20 per cent. 

Q. All right. Which time did you consider the 
contract of no validity, in February or March of 
1947, or in July, 1947? 

A. For about two days in March I considered it 
no good until I got that letter, explaining it, and 
then I considered it absolutely no good in July. 

Q. For two days in March, 1947, you thought the 
contract was all right? 

A. I thought their word was all right. 

Q. How about the contract? 

A. Their word modified the contract. 

Q. Did you make any payments under this con- 
tract? A. Which contract? 

Q. The one we will call the franchise. 

A. I made three or four payments on it. 

Q. The first one was when ? 

A. Around — I don't know the exact date, but 
somewhere around March 6th, I believe. 



304 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

Q. Didn't yon make your first payment Febru- 
ary 6th? A. Maybe that was the date. 

Q. That check is in evidence. That shows $338 
and $250 being allocated to the franchise. 

A. It does. 

Q. Did Mr. Hilts ask you for that? [226] 

A. He did not. 

Q. You paid it voluntarily I ' A. I did. 

Q. And when you paid the $250 and put on it 
"for franchise," you referred to what? 

A. To the franchise. 

Q. To the franchise? 

A. To the franchise payment I would have to 
make to Paramount. 

Q. That is, on the 20-per cent basis? 

A. It was on the franchise, on the franchise pay- 
ment, on a 50-50 basis. 

Q. A 50-50 basis? 

A. It had already been modified in November. 

Q. It is your position that that modification con- 
tinued to operate after December 31st? 

A. It was my notion that it did. 

Q. Did you make another payment labeling it 
"franchise"? A. I did. 

Q. That was the 6th of March, 1947? 

A. I believe it was. 

Q. That was the sole payment of $250 which you 
applied on the franchise? 

A. That is right. 

O. Then you made a third payment on March 
13, 1947? A. ] did. [227] 



vs. Charles P. Brewer, et al. 305 

(Testimony of Charles P. Brewer.) 

Q. And that was for the odd figure of $494.25? 

A. What is that? 

Q. That was for $494.25. That made the total 
payment $994.25? A. It did. 

Q. You designated it "on franchise"? 

A. I designated it that was all on franchise. 

Q. Can you reconcile any sum of money that 
you considered to be due on a 50-50 operator's basis 
with the sum that you paid ? 

A. No, or I would have never given him the $494 
check and told them I was done. 

Q. But you did give them the check ? 

A. I did. 

Q. You want this Court to now understand that 
when you gave them that check you knew it was 
money that you did not owe? 

A. I gave them the check, as far as I was con- 
cerned — you say for money that I didn't even owe 
to them? Yes, I do. 

Mr. Bernard: Objected to, your Honor. 

The Court: Sustained. 

Q. (By Mr. Rankin) : What was your reason 
for terminating the agency agreement or franchise 
of July 1st when you wrote your letter of July 24, 
1947? 

A. I don't understand that. 
(Question read.) 

A. Will you clarify that a little bit? 

Q. Why did you terminate your franchise agree- 
ment? [228] 



306 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

A. Why did I terminate my franchise agree- 
ment? 

Q. I have asked you three times, Mr. Brewer. 

A. I am trying to understand the question. 

Q. Yes. I think it is very simple. Why did you 
terminate your franchise agreement of July 1, 1946 ? 

A. Because I figured their word was no longer 
good, nor would they live up to it. 

Q. What word do you refer to ? 

A. To the modification of the contract. 

Q. In what particular? 

A. On the 50-50 basis. 

Q. That is, Paragraph 5 of the contract which 
calls for the 80-20 basis they had told you, under 
your theory, would be divided on a 50-50 basis? 

A. They did. 

Q. And, when they didn't live up to that, that 
is the reason you canceled your contract? 

A. That is entirely the reason. 

Q. What do you mean, entirely? 

A. There was no other reason. 

Q. That modification, as you term it, occurred 
in November, 1946? A. It did. 

Q. Just what was that modification? 

A. That modification was to break off from the 
20 per cent because the business would not cover it, 
and it would be split [229] 

Q. What was the modification, not its effect, but 
what was the modification ? 

A. That they would split with me the net profit, 
if anv, 50-50. 



vs. Charles P. Brewer, et al. 307 

(Testimony of Charles P. Brewer.) 

Q. Did Mr. Sibert talk to you anything about 
taking money home? A. Not especially. 

Q. Did he say that when you took any money 
home, if you remitted the same amount to him you 
could go on, using the balance in the establishment 
of your business ? A. Not in those words. 

Q. Did he say that in substance? 

A. He said if I got a dollar he would get a 
dollar. 

Q. Was any provision made in the agreement 
that you describe for building up the business? 

A. Yes. 

Q. What was to be devoted to building up the 
husiness ? 

A. If you are speaking of the Eastern Oregon 



run- 



Q. No, I am speaking of the business generally. 

A. I was to use the money that I started the 
business on and what I could glean out of it as we 
built the business up. 

Q. What you could what? 

A. Glean out of the profits. 

Q. How much could you glean out? How much 
could you devote to building the business up, your- 
self? 

A. Well, everything that I could get out of it. 

Q. You were going to take all the money you 
could get out of [230] the business, except what you 
took home, and then the additional amount that you 
were to pay Paramount, is that it? 



308 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

A. I don't understand it. Repeat that, please. 

Q. Yon say that you were going to pour back 
into this business whatever you did not need for 
yourself and Paramount'? Is that right*? 

A. That is right. 

Q. So that if you took a dollar home, then you 
were going to give Paramount an equal amount of 
money, and the balance you were going to use in 
the establishment of your agency. Is that correct? 

A. I don't understand just what you mean in 
this respect. 50 per cent of the net profits was to 
be split, yes. 

Q. Then, your answer to my question is "No," 
is it? 

A. That is what I am afraid of. I was trying 
to understand. 

Q. You need not be afraid. 

A. I want to understand it before I say so. 

Q. So, your answer is "No"? 

A. All right. 

Q. When you sent in your letter of July 24, 
1947, your letter of termination, why didn't you 
give the 90 days called for in the contract? 

A. Because I knew if I gave them that 90 days, 
they would move in here with a dozen men and take 
over possession of everything in sight, and I would 
be left sitting here broke. [231] 

Q. You knew of that provision in the contract? 

A. I did. 

Q. You purposely avoided it for the reason you 
have just -stated? A. Yes. 



vs. Charles P. Brewer, et ah 309 

(Testimony of Charles P. Brewer.) 

Q. In reference to the June accounting of 1947, 
do you recall whether or not Mr. Hilts and Mr. 
Sibert talked over this whole matter with you at 
that time? 

A. They never pulled an accounting. 

Q. Did you see them on June 17th? 

A. They never pulled an accounting on June 
17th. 

Q. Well, to make this very short : Did you hear 
Mr. Sibert and Mr. Hilts testify about what hap- 
pened on June 17th? A. I did. 

Q. What they have said is not correct? 

A. Right. 

Q. When was that accounting had, then? 

A. It was some time after the 25th day of June. 
Excuse me. Hilts came back from Spokane, got into 
the office with keys that I had left, got his rough 
draft or whatever he pulled, took it to California 
and called Mr. Sibert 's home at nine o'clock at 
night. I never did see that paper. 

Q. You never saw what paper? 

A. The final draft. 

Q. Did you ever see any statement of the busi- 
ness done to [232] June 30, 1947? A. I did. 

Q. Where was that? 

A. That was in the office, here in Portland, 
around July 9th or 10th. 

Q. Did you go over the figures then with Hilts? 

A. No, not completely. I glanced at them and 
did not approve of them. 



310 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

Q. You made a payment ? 

A. I made a payment. 

Q. Why did you make a payment if you did not 
approve of it? 

A. Because Mr. Hilts told me they were very 
much in need of money, and he would like to take 
some money home and couldn't I give him a check to 
take back. 

Q. So you gave it to him out of charity towards 
the corporation? A. No charity. 

Q. Why did you pay it if you did not owe it? 

A. Because I was still in debt a certain amount 
of money to Paramount and any money that I gave 
him was to apply on that debt. 

Q. Referring to Exhibit No. 36, can you turn to 
it there ? A.I have it. 

Q. Is that ink endorsement there of a payment 
of $259.61 your endorsement? 

A. It is. [233] 

Q. You gave Mr. Hilts a check 

A. for that amount. I did. 

Q. for that amount? A. Yes. 

Q. That was $256.61, wasn't it? 

A. Check No. 413, $259.61, it says here. 

Q. $259.61? A. Yes. 

Q. Now, you testified on direct examination, I 
believe, that you determined to go into business for 
yourself on the 15th day of August. You meant 
July, did you not? 

A. I believe I said somewhere around the 20th 
or 25th of July. 



vs. Charles P. Brewer, et al. 311 

(Testimony of Charles P. Brewer.) 

Q. That is July? A. Yes. 

Q. Who owned this business from August 1, 
1947, to August 27, 1947? 

A. The assumed name was in my wife's name, 
but we owned it. 

Q. I didn't ask you that question. 

A. We owned it. 

Q. "We?" A. My wife and I. 

Q. Did your wife understand that she owned it? 

A. She certainly did. 

Q. Did you understand that you had an owner- 
ship in it, too? A. I did. [234] 

Q. Why did she make the record that she was 
the sole owner of it ? 

A. An assumed name blank, that is filled out re- 
gardless of whatever business you go into; you have 
to file an assumed name certificate. 

Q. That does not answer my question. When 
you had a part-ownership in it, why did you have 
your wife sign that she had the ownership alone? 

A. I was busy working. I didn't want to take 
the time off and go through all the red tape that 
there may be connected with it. 

Q. You know that record was false? 

A. It was not false. 

Q. You had an ownership in it, you say? 

A. I could have an ownership in it. There is 
a community property law in the State of Oregon. 

Q. You did have an ownership in it, you say? 

A. I did. 



312 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

Q. Why didn't you file it? 

A. Whatever is hers is half mine, isn't it? 

Q. Why didn't you make a recording to that 
effect? 

A. The assumed name did not call for that. 

Q. The blank calls for it. Look at it. "True 
Names * * * of the persons conducting, having an 
interest in." It calls for the names of all parties 
who are interested in the business. 

A. My daughter is interested in it. [235] 

Q. How old is she? 

A. She is fourteen. 

Q. Why didn't you put her on the assumed 
name certificate? 

A. Because we did not consider it necessary. 

Q. It was not done, I take it, for the reason 
that you did not want Paramount to know that you 
were going into a competitive business ? 

A. They would have known I was going in with 
her name or mine or both. 

Q. You mean by that, even if she did file the 
certificate by herself, they would know you would 
be back of it ? 

A. They would know or anybody else would 
know that it was our business. 

Q. As a matter of fact, Mr. Brewer, you in- 
tended to go into this business long before the 25th 
or anywhere near the latter part of July, didn't 
you? A. I didn't. 



vs. Charles P. Brewer, ct al. 313 

(Testimony of Charles P. Brewer.) 

Q. You intended to take over the business of 
Paramount Pest Control Service because you were 
the only person that the customers of Paramount 
knew ? A. That is not so. 

Q. Consequently, you placed your order for 
business cards with your printer as early as the 
first part of July, 1947, didn't you? 

A. If that is on the statement, I can't help it. 
I don't remember [236] any dates. 

Q. Do you recall that as early as July 7, 1947, 
you placed Order No. 8564 with Allard J. Conger, 
doing business as Conger Printing Company, on 
the East Side, for 1500 business cards, in the name 
of Brewer's Pest Control? 

A. I don't remember dates. 

Q. You don't remember what? 

A. I remember that I ordered cards from him 
some time, any time up to and including now, from 
Conger's. I don't remember any dates. 

Q. What were those cards? What did they say? 

A. Just said " Brewer's Pest Control" with the 
representative's name on it, if they are business 
cards you are speaking of. 

Q. Did you not, on the same date, July 7, 1947, 
enter Order 8561 for service orders ? 

A. I don't know. 

Q. Will you say you didn't? 

A. I said I didn't know. 

Q. Don't you know what you did? You have tes- 
tified about other details here. 



314 Paramownt Pest Control Service 

(Testimony of Charles P. Brewer.) 

A. You are asking me for dates. I don't know 
dates. 

Q. I am asking you if you put in service orders 
to 

A. I put in service orders, yes. 

Q. You put in an order, I mean, to this very 
printer for service order forms, didn't you? [237] 

A. I did. 

Q. Did you not, on July 7, 1947, or before the 
date of your termination of this agreement, put in 
Order 8522 to Allard J. Conger for receipts? 

A. I don't know. 

Q. Why don't you? 

A. Because I don't know what date I put it in. 

Q. I said on any date before your termination? 

A. I put in an order. I don't know the date. 

Q. Was it before your letter of resignation? 

A. I don't remember. 

Q. You say you don't remember? You did not — 
Would you say you did not? 

A. I wouldn't say. 

Q. Did you, on or about July 7, 1947, or at any 
time prior to your letter of resignation, place with 
Allard J. Conger Order No. 8503 for a large number 
of service slips? A. I don't know. 

Q. Were not all of these orders put in long be- 
fore your payment of July 9, 1947, of the $259.61 ? 

A. I don't know. 

Q. At the time you put in these orders or made 
that payment, did you tell any member of the Para- 



vs. Charles P. Brewer, et al. 315 

(Testimony of Charles P. Brewer.) 
mount Pest Control Service that you were prepar- 
ing to take over this business yourself % 

A. I did not. [238] 

Q. Why not? 

A. I was not preparing to take over any busi- 
less. 

Q. What were you doing with these orders? 

A. If I had placed the orders, it would have been 
^oing into business. 

Q. And if you had placed the orders and if you 
were intending to go into business, why wouldn't 
yon tell Paramount Pest Control Service, if you 
were honest about it? 

A. Would it concern Paramount if I went' into 
justness? 

Q. Why, definitely. 

A. I had told both Hilts and Sibert I would go 
ahead during the month of July, carry it during 
lie month of July. 

Q. Carry what? 

A. Carry the business during the month of 
July. 

Q. We will come back to that in a moment. But 
why didn't you tell them you were preparing to 
^o into business for yourself ? You knew you were ? 

A. I told Hilts I would not get out of the pest 
control service when I told him that I was through 
with Paramount, end of July. 

Q. Did you not want, by these forms that you 
were getting out, these business cards, service or- 



316 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 
ders, receipts and slips, want the customers of Para- 
mount Pest Control Service to think this was iden- 
tically the same service that was going on except 
with the change of name ? 

A. I didn't want them to think anything bad 
about anybody. [239] 

Q. That is not my question. 

A. I didn't understand your question. 

Q. I think you did. 

(Question read.) 

A. No, I didn't. 

Q. But did you not hand to this printer the forms 
of Paramount Pest Control Service, with correc- 
tions on the Paramount forms to conform to your 
new proposed business ? 

A. Yes, I probably did. 

Q. You know you did, don't you ? 

A. All right, I did. 

Q. Why didn't you say so? 

A. Because I didn't understand just about your 
dates there. 

Q. Didn't you order them in the early part of 
July, 1947, for the purpose of having them on hand 
when your resignation became effective on August 
1, 1947? 

A. I don't know the exact date that I ordered 
them. 

Q. Didn't you order them to have them on hand 
so you could take over this business? 

A. I did have them on hand. 



vs. Charles P. Brewer, et ah 317 

(Testimony of Charles P. Brewer.) 

Q. Now, then, can you give the Court a very 
much better idea of when you determined to take 
over this business? 

Mr. Bernard: Object to that, your Honor — if 
the Court please. He is assuming a state of facts 
the witness has not testified to. [240] 

The Court : He may answer. 

(Question read.) 

A. Well, I can't give the date. 

Q. Give the circumstances. 

A. I told Hilts around July 9th or 10th, when 
le filled out this statement that he presented to 
me 

Q. (By Mr. Rankin) : I am not asking you 
what you told Hilts. I am asking you for your 
mental process when you determined to take over 
his business. 

A. I don't know. I am trying to tell you when 
I more or less started to make up my mind. I don't 
mow the exact time. 

Q. When did you make up your mind? 

A. I don't know the exact date, but it was made 
up completely by the 20th to 25th. 

Q. Were you incurring the expense of all these 
orders without having made up your mind that 
you were going to take over this business? 

A. If they w 7 ere placed by that time, then, I 
was taking on the bills for it personally. 



318 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

Q. Then if they were placed as early as July 
7th, how long before that would you say you made 
up your mind? 

A. Possibly I could have done so when I told 
Sibert I was through after the end of July. 

Q. Through where? 

A. Through with the company. [241] 

Q. You told you were going on through during 
July? 

A. I told him I would run it during the month 
of July. 

Q. Yes. When did you and your wile discuss 
the matter of terminating your agency? 

A. I don't remember the date; some time in 
July. 

Q. It was not until July that you and your 
wife discussed it? A. Nothing definite, no. 

Q. When was it first suggested between you and 
Mrs. Brewer that you terminate your agency? 

A. When I told Sibert I would stay with it dur- 
ing the month of July. 

Q. Wasn't it previously discussed with her? 

A. No. 

Q. Will you please answer my question? It will 
save a lot of time. When did you and your wife 
first discuss the termination of this agency ? 

A. After F had told Sibert that I would carry on 
the business during July. 

Q. What date was that? 

A. It was some time around the end of June, 
after the first day of July, in his home in Oakland. 



vs. CJiarles P. Brewer, et al. 319 

(Testimony of Charles P. Brewer.) 

Q. When did you discuss with Mr. Duncan that 
you were going to take over this business? 

A. You keep referring to taking over the busi- 
ness. I didn't take over the business. [242] 

Q. What did you do 1 

A. I went into business for nryself. 

Q. Isn't that just another way of saying you 
would take over all of Paramount 's business you 
could get? A. No. 

Mr. Bernard: Object to the question. It is argu- 
mentative. 

The Court : He may answer. 

A. There is lots of new business started up in 
the State of Oregon, and I went after that. We 
didn't take over anybody's business. 

Q. (By Mr. Rankin) : Do you know whether or 
not you are under obligation not to solicit? 

A. I don't know about anything concerning that. 

Q. You were aware of the provision in your 
franchise that you were not to solicit customers of 
Paramount? A. I was. 

Q. Did it mean anything to you? 

A. Not after they w 7 ould not keep their word 
with me. 

Q. When did you discuss going into business for 
yourself with Rightmire ? 

A. I told him I was going into business some 
time around the first of August. 

Q. When did you ioW him you were going into 
business ? 

A. Some time around the first of August. 



320 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

Q. And lie did not know prior to that, prior to 
the first of [243] August, that you were going into 
business for yourself ? 

A, As far as I knew, he didn't. 

Q. Then you would be the only one that would 
tell him, or would your wife? 

A. 1 would have told him. 

Q. You did not take it up with Rightmire until 
August 1st, is that right? 

A. I don't know just the exact date. 

Q. You have been pretty definite in all other 
things. 

. $ A. I know the last week of July he was on vaca- 
tion. I didn't see him the last week of July. 

Q. That may be, but didn't you talk it over 
earlier in July, before he ever w T ent on his vacation? 

A. I don't remember. 

Q. And as important a matter as your breaking 
your franchise and going into business for yourself 
does not leave an impression on you as to when you 
told Rightmire you were going into business? 

A, It does not. 

Q. When did you discuss with Merriott the fact 
that you were going into business for yourself? 

A. I think it was around the first of August. 

Q. So, while you placed all these orders for 
Brewer's Pest Control, you did not lay any grounds 
for the servicing that you were going to require with 
any employees that you subsequently had until Au- 
gust 1st, 1947? [244] 



vs. Charles P. Brewer, et at. 321 

(Testimony of Charles P. Brewer.) 

A. I would have done all my own service work 
if I hadn't had any employees. 

Q. I say, you did not make any arrangement 
until August 1st, 1947? 

A. No definite arrangement. 

Q. Did you make any indefinite ones? 

A. I don't know. There may have been a word 
said, but there was nothing deliberately specified. 

Q. Sort of a general understanding? 

A. No, I wouldn't say that. 

Q. Was "Brewer's Pest Control" in the tele- 
phone book, — Was its number in the telephone book 
when you left the services of Paramoimt Pest Con- 
trol Service ? A. No. 

Q. How would all the customers that you had 
previously served in the name of Paramount know 
where to find Brewer's Pest Control? 

A. They would have had to call Brewer's Pest 
Control. 

Q. Individually? A. Right. 

Q. Did you tell those customers to call you at 
your home number? 

A. I only talked to a very few customers. 

Q. Answer the question. 

A. What customers? 

Q. Paramount 's customers. 

A. I never told Paramount 's customers to call 
me at any time. [245] 

Q. Did you ever let them know the number on 
these 1500 business cards that you were having 
printed to put out? A. I did. 

Mr. Rankin: No further cross-examination. 



322 Paramount Pest Control Service 

(Testimony of Charles P. Brewer.) 

Redirect Examination 
By Mr. Bernard: 

Q. I want to ask you one or two questions. Did 
you order any cards, forms or anything prior to the 
time you had been notified that on the first of July 
you would have to go back on the 20-80 basis'? 

A. I did not. 

Mr. Bernard : I think that is all. 

Mr. Rankin: That is all, your Honor. 

(Witness excused.) 

The Court: I am sorry to have to make a little 
explanation about my own circumstances. I imag- 
ine it won't be satisfactory to you gentlemen. Mr. 
Lyon is here from Los Angeles. I have to hear him 
aohie time today, as well as opposing counsel in a 
patent case. Then tomorrow I cannot hear you at 
all, due to an emergency matter that has arisen in 
the court. I can resume this case on Friday and con- 
tinue over to Saturday, if that is necessary. 

Mr. Bernard : That will be quite satisfactory to 
me. In fact, for reasons of ray own, I was going to 
have to ask the Court [246] not to run too late this 
afternoon anyway. 

The Court: Mr. Rankin, may we have your con- 
currence in resuming this matter on Friday? 

Mr, Rankin : I know how T busy this Court is. 
While, as the Court correctly prophesied, it is not 
satisfactory, it will have to be done because I know 



vs. Charles P. Brewer, et al. 323 

the compulsion that the work of this Court is under. 
If your Honor will just designate when to report, 
that will be satisfactory. 

The Court: We will resume Friday morning 
and, if necessary, run Saturday as well. 

(Thereupon, an adjournment was taken until 
10:00 o'clock a.m. Friday, January 23, 1948.) 

Court reconvened at 10:00 o'clock a.m., Friday, 
January 23, 1948, pursuant to adjournment. 

ALLARD J. CONGEE 

was thereupon produced as a witness on behalf of 
plaintiff and, being first duly sworn, was examined 
and testified as follows : 

Direct Examination 
By Mr. Rankin : ' ■ 

Q. Your name is Allard J. Conger ? 
A. Yes. 

Q. Where do you live, Mr. Conger ? 
A. 2030 Southeast Harrison, Portland. 
Q. What is your business ? 
A. Printing and lithographing, sir. 
Q. How long have you been so engaged ? 
A. Since 1918. 

Q. Do you know Mr. Brewer? 
A. Just as a casual customer, yes. 
Q. When did you first know him? 
A. I believe — Oh, I think it was the beginning 
of 1947, as far as I can recall. 

Q. Did you ever do any printing for him? 
A. Yes, sir. 



324 Paramount Pest Control Service 

(Testimony of Allard J. Conger.) 

Q. What did you do? 

A. Oli, various small forms, cards and stationery. 

Q. Have you any record of those jobs? 

A. We always keep a complete record of all 
work done. 

Q. I would like to hand you, Mr. Conger, cer- 
tain exhibits in this case known as 64, 65, 66, 67, 68, 
69, 70, 71, 72, 73, 74 and 75, and ask you if you can 
identify any of those exhibits and your having any- 
thing to do with them? 

A. Yes. Those are all checks that cleared 
through our bookkeeping department and the work 
here, I believe, was all produced in our plant. 

Q. When was that done? 

A. Well, it was during 1947. 

Q. Can you give the Court a more specific date ? 

A. I will have to refer to our records here in 
order to do that. Succeeding dates, July 7th 

Q. Did he place an order with you on July 7th? 

A. That is the date the order was placed. 

Qc What order was placed on July 7th? 

A. Service orders, 2,000 service orders. 

Q. What were those? Can you identify among 
the list of exhibits the one you classify as a service 
order ? 

A, Yes, sir. It is this form here, and so states on 
the heading, " Service Order." 

Q. Can you refer to an exhibit number? There 
is a stamp on it in the lower right-hand corner, I 
believe. A. Exhibit No. 70. [249] 



vs. Charles P. Brewer, et al. 325 

(Testimony of Allard J. Conger.) 

Q. Exhibit No. 70? A. Yes. 

Q. There were two thousand of those? 

A. Yes. 

Q. What was the next order? 

A. The next was another order on July 7th, re- 
ceipts in duplicate. 

Q. Do you find among those exhibits a copy of a 
receipt that you printed? A. Yes, sir. 

Q. What exhibit number is that? 

A. Exhibit No. 67. 

Q. Exhibit No. 67? A. Yes. 

Q. How many of those receipts did you print? >-. 

A. 2,000 sets, in duplicate. 

Q. What was the next order? r 

A. The next order was also July 7th was 5,000 
service slips. \ : - V; 

Q. 5,000 service slips. Do you find any exhibit 
number there covering service slips of that char-^ 
acter that you printed? A. Yes, sir. 

Q. What exhibit number is it? 

A. Exhibit No. 68. 

Q. Exhibit No. 68? A. Yes. [250] 

Q. What other order, if any, did you receive 
from Mr. Brewer? 

A. There is quite a few here on succeeding dates. 
July 7th, 2,000 statements; July 11th, I should feay. 

Q. Were there any more on July 7th ? 

A. No, that is all entered on July 7th. 

Q. I direct your attention to Order 8564 for 
1,500 business cards. What was the date of that 
order? A. That was July 7th. 



326 Paramotmt Pest Control Service 

(Testimony of Allard J. Conger.) 

Q. July 7th? A. Yes, sir. 

Q. How many of those business cards did you 
print? Is that the correct number, 1,500? 

A. 1,500, sir. 

Q. Do you find any exhibit number for a busi- 
ness card among those exhibits that were handed to 
you? A. Yes, sir. 

Q. What is the exhibit number of that? 

A. No. 69. 

Q. 69? A. Yes. 

Q. When did you deliver the wares or goods 
made under these July 7th orders? 

A. They were delivered at different dates. 

Q. When was the first date of delivery ? 

A. The first date of delivery was July 14th on 
the 1,500 cards. [251] 

Q. Those were the business cards represented by 
Exhibit 69? A. Yes, sir. 

Q. Were all of those products delivered at vari- 
ous times thereafter? 

A. Yes, sir, various dates. 

Q. Did you render him a statement for them? 

A. They were rendered, yes, later in the month. 

Q. But you did render statements? 

A. Yes. 

Q. And were they paid? 

A. Very promptly paid, yes. 

Q. And the checks that are in evidence there are 
the checks you received in payment for the printing 
service that you have described, is that correct? 

A. Yes, that is correct. 



vs. Charles P. Brewer, et al. 327 

(Testimony of Allard J. Conger.) 

Q. How did you get the forms from which to do 
that printing that you have described"? 

A. They were furnished by Mr. Brewer. 

Q. Have you those forms'? 

A. I may have some of them. 

Q. Will you produce all you have, please? 

A. There (indicating) is a copy of the business 
card, service order and receipt. That is all I have 
with me. 

Q. May I see them? A. Yes. [252] 

Q. Mr. Conger, I would like to hand you the 
card of the Paramount Pest Control Service with 
Charles Brewer, as manager, and ask you if that 
is a form that you refer to as having used from 
which to draw Mr. Brewer's busines cards? 

A. Not necessarily. That was a copy of their 
card. I believe that was brought along more for 
style. The pencil written copy here, I believe is 
the one that was followed, instead of the type. 

Q. But he offered it to you at the time for the 
style of the card? A. That is right. 

Mr. Rankin : We wish to offer that in evidence. 

The Court: Take everything over to Mr. Ber- 
nard. You have not seen these things, have you ? 

Mr. Bernard: No, we have not, your Honor. 

Mr. Rankin : I had not seen them before, either. 

Q. I hand you what purports to be a copy of a 
service order for Paramount Pest Control Service 
with "Paramount" and "Service" and other mat- 
ters stricken out and "Brewer's " I don't 

know what that is. "Brewer's" is written over it. 



328 Paramount Pest Control Service 

(Testimony of Allard J. Conger.) 
I will ask you if that material was given to you — 
if that is the material that was given to you, as you 
describe, for the purpose of drawing Mr. Brewer's 
contract form. 

A. Yes. This particular form was used as copy, 
with the changes indicated. [253] 

Mr. Eankin : We offer that in evidence. 

Q. If I understand your testimony correctly, 
you said you had also drawn a large number of re- 
ceipts, and I hand you this receipt, originally of 
the Paramount Pest Control Service, with " Para- 
mount " and "Service" stricken out and "Brewer's 
Statewide" Pest Control or "Brewer's Statewide" 
written over it, and ask you if this is the form 
from which you made Mr. Brewer's receipts? 

A. Yes, sir, that is the case. That is the copy 
that was used. 

Mr. Eankin : We offer that in evidence. 

Q. Have you had any talk with Mr. or Mrs. 
Brewer since the first of the week? 

A. He was in the office, I believe, yesterday. 

Q. Did he see you? A. Yes. 

Q. What did he want? 

A. He wanted to confirm the date of the pur- 
chase order of these items. 

Q. Did you confirm it with him? 

A. I did. 

Q. Was there any other conversation? 

A. I believe not. 

Mr. Rankin: That is all. You may cross- 
examine. [254] 



vs. Charles P. Brewer, et al. 329 

(Testimony of Allard J. Conger.) 

Cross-Examination 
By Mr. Bernard: 

Q. When did you say Mr. Brewer was in? 

A. Yesterday. 

The Court: Do you have any objection to them? 

Mr. Bernard: No, I have not, your Honor. I 
have no objection. 

The Court: They are all admitted. Do you 
want to give them exhibit numbers before Mr. Ber- 
nard cross-examines? 

(Copy for business cards furnished Conger 
Printing Company thereupon received in evi- 
dence and marked Plaintiff's Exhibit No. 78.) 

(Copy furnished Conger Printing Company 
for service order thereupon received in evi- 
dence and marked Plaintiff's Exhibit No. 79.) 

(Copy furnished Conger Printing Company 
for receipt thereupon received in evidence and 
marked Plaintiff's Exhibit No. 80.) 

Mr. Rankin: The service order is here; the 
receipt is here; the business card is here, but I do 
not find the service slip. We had it here and he 
described it as 5,000. Where has it gone? Have 
you got it over there ? 

Mr. Bernard: No, we haven't got it. [255] 
A. I believe it is in this bunch. I don't believe 
I gave you a copy of the service slip. I do not 
have that one here. 



330 Paramotmt Pest Control Service 

(Testimony of Allard J. Conger.) 

Mr. Rankin: You do not have a copy of that? 

A. No, I just have the three. The three was all 
I brought in. 

Q. (By Mr. Bernard) : Would you examine 
Plantiff's Exhibit No. 79 and tell whose handwrit- 
ing that is up at the top ? 

A. I believe that is my office manager's hand- 
writing. 

Q. As a matter of fact, you did not take this 
order at all, did you ? One of your employees did ? 

A. I believe that is correct. 

Q. That order was put in on what date ? 

A. July 7th. 

Q. Then the order placed on July 7th was placed 
with one of your employees'? 

A. I believe that is right. 

Mr. Bernard : That is all. 

Redirect Examination 
By Mr. Rankin : 

Q. You then printed these slips in accordance 
with the order, did you ? A. That is right. 

Q. And Mr. Brewer received them? 

A. Yes, sir. 

Q. He made no objection to them? [256] 

A. No, sir. 

Q. And the only direction you had was that 
which you have indicated as to how those orders 
were to be compiled? A. That is right. 

Q. Did Mr. Brewer sign your order book in any 
way? 



vs. Charles P. Brewer, et al. 331 

(Testimony of Allard J. Conger.) 

A. We keep a record of receipts in the office. 
I haven't those available here. 

Mr. Rankin: That is all. Just a moment. For 
your information, after this is all over and the 
Court has finished with them, I will be glad, on 
your request, to have these returned to you for 
your files, if possible. 

A. Thank you. It is not too important if they 
are not returned. 

The Court: That is all. Step down. 

(Witness excused.) [257] 

G. H. HANSEN 

was thereupon produced as a witness on behalf of 
plaintiff and, being first duly sworn, was examined 
and testified as follows: 

Direct Examination 
By Mr. Rankin : 

Q. Give your name to the Court, please. 

A. G. H. Hansen. 

Q. Is that P. H J A. G. H. 

Q. Where do you reside? 

A. In Portland. 

Q. What is your occupation? 

A. I am District Agent for the IT. S. Fish and 
Wild Life Service. 

Q. How long have you been such? 

A. I have been in Oregon since September, 1945. 

Q. Were you in that service prior to that date? 

A. I have been in that service since 1931. 



332 Paramount Pest Control Service 

(Testimony of G. H. Hansen.) 

Q. Do you know Charles P. Brewer? 

A. No, I don't. I don't recall ever having met 
him. 

Q. Do you have anything to do with a common 
poison known as 1080 ? A. Yes, we have. 

Q. I should not say " common." It is not. Do 
you have anything to do with a poison commonly 
known as 1080? 

A. Our field men, as well as myself, after being 
authorized [258] by our central office, are permitted 
to use it under certain circumstances, under proper 
regulations within the State of Oregon. 

Q. Are you the head of the department here? 

A. I am the head of that department that uses 
that material. 

Q. Is it a common poison on the market ? 

A. No, sir, it is not. 

Q. How do you buy it? 

A. We requisition it, on approval from the cen- 
tral office, from our Pocatello supply depot. 

Q. There is testimony in this case, given by Mr. 
Brewer here, that in July of 1947 he went to the 
Fish and Wild Life Department in the Weatherly 
Building and purchased one pound of a poison 
known as 1080, for which he paid $8.00. 

Do you find any record of such a purchase? 

A. We are not permitted to sell 1080. 

Q. Well I would like to get an answer to that 
question. Do you find any record of his having 
made a purchase? 

A. No, there is no record in our office. 



vs. Charles P. Brewer, et al. 333 

(Testimony of G. H. Hansen.) 

Q. You say you are not permitted to sell 1080? 

A. That is correct. 

Q. Will you explain to the Court why % 

A. 1080 is definitely a hazardous poison to han- 
dle. The research people don't know too much 
about it yet. So far as we know, there is no anti- 
dote and it is not supposed to be available [259] 
to the general public until more is known about 
this poison as it is used. 

Q. Are there means by which established con- 
cerns can purchase that poison*? 

A. I understand that established persons can 
purchase it direct from the company that manu- 
factures it. 

Q. You were previously advised by us, were you 
not, that Mr. Brewer had claimed to make this 
purchase from your department in the Weatherly 
Building ? A. Yes. 

Q. What department is that in the Weatherly 
Building? 

A. The Fish and Wild Life Service office in the 
Weatherly Building is our regional office, and they 
handle all fiscal matters that pertain to the six or 
seven western states in the Northwest. 

Q. Do they have 1080 on hand to purchase 
there ? 

A. They don't handle 1080 in the Weatherly 
Building. 

Q. Did you make inquiry of the office to ascer- 
tain whether that is correct or not? 

A. I called them last night and they have no 
records of ever having it over there. 



334 Paramount Pest Control Service 

(Testimony of G. H. Hansen.) 

Q. Suppose an application had been made at 
the Weatherly Building: for the purchase of 1080, 
what would have happened to that application? 

A. That would have been referred to our office 
over here in [260] the Pioneer Post Office Building. 

Mr. Rankin : That is all. 

Cross-Examination 
By Mr. Barnard: 

Q. Was your office formerly in the Weatherly 
Building? 

A. Our office was formerly in the Weatherly 
Building. 

Q. When did you move ? 

A. It will be two years this April. 

Q. How many employees are there over there 
in the Weatherly Building? 

A. We have at the present time two office girls 
and Mr. Boomhower who is in charge of law en- 
forcement, and Al Moore who is with the research 
division. 

Q. What men were over there in July, 1947? 

A. The same men that I have just named. 

Q. Those are all of the men that were over there 
in July? A. That is correct. 

Q. Is there a man by the name of McDonald 
over there? A. McDonald? 

Q. Yes. 

Q. There is a McDonald in the Weatherly Build- 
ing, not in our office. 



vs. Charles P. Brewer, et al. 335 

(Testimony of G. H. Hansen.) 

Q. I meant to ask you about the personnel over 
there in the Weatherly Building. What men were 
there in July, 1947, in the Weatherly Building? 

A. I don't know all the employees in the Weath- 
erly Building. 

Q. About how many men are employed over 
there? 

A. Most of them are bookkeepers. There are, 
I think, four or five regional inspectors and the re- 
gional director and the assistant regional director. 

Q. There was a man by the name of McDonald 
over there? A. Yes. He is still there. 

Q. What is his position there in that office? 

A. He is in charge of Federal refuges in this 
region. 

Q. What do you people use this 1080 for? 

A. We use it on rat control work and predatory 
animal control work. 

Q. You do not sell any of it? A. No. 

Q. Or are not supposed to sell any of it? 

A. We don't sell any, no. 

Q. Did you ever get any of it over there? 

A. No. 

Q. This 1080, in what shape does it come to 
your office? 

A. The packages that we have received are half- 
pound containers with the manufacturer's label on 
them. 

Q. What manufacturer? 

A. The Monsanto Chemical Company. 



336 Paramount Pest Control Service 

(Testimony of G. H. Hansen.) 

Q. I am not going to take this out of the sack, 
but look at that can and that sack and tell if that 
is the kind of cans [262] this comes in to your de- 
partment ? 

A. Yes, the kind of cans which the manufac- 
turer shipped it in. 

Q. And the can — the kind that come to your 
office? A. Yes, sir. 

Mr. Bernard: Do you want to look at it? 

Mr. Rankin : Will it hurt me if I look at it ? 

A. No, sir, it won't hurt you. 

Mr. Bernard: That is all. 

Redirect Examination 
By Mr. Rankin: 

Q. This can says, " Don't breathe dust or get 
on skin." That is true, is it? A. Yes. 

Q. Use rubber gloves? 

A. That is recommended, yes. 

Q. And that is the Monsanto Chemical Com- 
pany? A. The Monsanto Chemical Company. 

Q. It has marked on it "Fatal Poison" with the 
skull and crossbones and "Fatal Poison" all in red. 

A. Yes. 

Q. Is Mr. McDonald, to your knowledge, per- 
mitted to sell 1080? 

A. No, to my knowledge he is not. 

O. Would you know if he were permitted to 
sell it? 

A. Yes, I would be advised if he was permitted 
to handle it or sell it. [263] 



vs. Charles P. Brewer, et al. 337 

(Testimony of G. H. Hansen.) 

Q. Have you ever been advised that McDonald 
has any right to sell 1080 ? A. No, sir. 

Q. There is one question I should have asked 
you on direct examination and, with the Court's 
permission, I would like to ask it now. 

Did Mr. Brewer come into your office in the last 
few days, to your department? 

A. The young ladies in the office report Mr. 
Brewer was in yesterday, day before yesterday. 

Q. For what purpose? A. To obtain 

Mr. Bernard: That would be hearsay. 

Mr. Rankin: He is in charge of the office. 

The Court: Answer the question. 

A. To obtain some 1080. 

Mr. Rankin: Did he get it? 

A. No, he didn't get it. 

Mr. Rankin : That is all. 

Recross Examination 
By Mr. Bernard : 

Q. Can you tell me the name of any of the other 
men over there in that office? 

A. In the Weatherly Building? 

Q. Yes. [264] 

A. Well, I don't think I would be permitted 
to, under the regulations of the Department. I 
don't think I would be. I don't think I should 
answer that. 

Q. Can you tell me about how many of them 
there are over there? 



338 Paramount Pest Control Service 

(Testimony of G. H. Hansen.) 

A. There are four or five regional inspectors; 
there is the administrative office; there is the re- 
gional directors and the assistant regional director 
and some clerical help. 

Mr. Bernard: That is all. 

Mr. Rankin : That is all. 

(Witness excused.) [265] 

C. W. FISHER 
was thereupon produced as a witness on behalf of 
plaintiff and, being first duly sworn, was examined 
and testified as follows : 

Direct Examination 
By Mr. Rankin: 

Q. Your name is what? A. C. W. Fisher. 

Q. Where do you live, Mr. Fisher? 

A. 2400 Tenth Street, Berkeley, California. 

Q. What is your business? 

A. Pest control. 

Q. By whom are you now employed? 

A. By the Sully-Van Corporation. 

Q. Were you ever employed by Paramount Pest 
Control Service? A. Yes, sir. 

Q. You were in the employ, were you, of the 
Paramount Pest Control Service in July, 1947 ? 

A. Yes, sir. 

Q. Did you at that time see the defendant, 
Charles P. Brewer? A. I did. 

Q. Where did you see him? 



vs. Charles P. Brewer, et al. 339 

(Testimony of C. W. Fisher.) 

A. Saw him at the Paramount Pest Control 
office, 519 Northwest Park in the evening, around 
5 :00 p.m., July 30, 1947. 

Q. Did you see him anywhere else that evening? 

A. Yes. [266] 

Q. Where ? 

A. We had dinner and spent the entire eve- 
ning together, Mr. and Mrs. Brewer and myself. 

Q. Whereabouts ? 

A. First, we drove from the office out to his 
home here in Portland, on 28th Avenue, I believe 
it is, and, on our arrival there, Mrs. Brewer and 
Mr. Bay Rightmire were in the kitchen visiting, 
and Mr. Brewer was very happy to see Mr. Right- 
mire there because he had just returned from a 
few days' vacation. 

Q. I should ask you, Mr. Fisher: Are you any 
relation to any of the officers of the Paramount 
Pest Control Service? A. Yes, sir, I am. • 

Q. What relation, and to what member? 

A. A brother to G. H. Fisher, one of the own- 
ers of the Paramount Pest Control Service. 

Q. Did you, on this evening that you describe 
in July, when you met Mr. and Mrs. Brewer and 
Mr. Rightmire, have any discussion with those 
gentlemen and that lady? A. Yes, sir. 

Q. Did that discussion relate to why Mr. Brewer- 
was leaving Paramount? A. It did. 

Q. Will you begin at the beginning and briefly, 
but fully, as fully as necessary, tell what was said 



340 Paramownt Pest Control Service 

(Testimony of C. W. Fisher.) 

in relation to Paramount and their leaving Para- 
mount? [267] 

A. The first discussion — Mr. Rightmire stated 
that he was glad he had taken a vacation because 
if he hadn't taken it then he would not have had 
it as a member of the Paramount Pest Control 
Service, and there w 7 as a little discussion at that 
time. Mr. Rightmire left, and Mr. and Mrs. Brewer 
and I returned to the Roosevelt Hotel, where I 
was staying, and we had dinner at the Roosevelt 
and, immediately after dinner, we retired to my 
room there. 

Q. How long was it discussed with Mr. Right- 
mire in the Brewer home ? 

A. Just a few minutes, ten or fifteen minutes, 
possibly. 

Q. Do you know what he was saying there? 

A. He was telling of his vacation trip that he 
had just returned from. 

Q, Whom was he telling that to? 

A. Mrs. Brewer, when we arrived, and he told 
Mr. and Mrs. Brewer and myself about it. 

Q. After you had finished your dinner, where 
did you go, you and Mr. and Mrs. Brewer? 

A. We went to my room in the Roosevelt Hotel. 

Q. About what time did you go to your room? 

A. Some time between 9 and 10 o'clock. 

Q. How long did they remain discussing the 
matter with you in your room at the Roosevelt 
Hotel at this time ? 

A. Until after midnight. [268] 



vs. Charles P. Brewer, et al. 341 

(Testimony of C. W. Fisher.) 

Q. Did they tell you they were leaving Para- 
mount? A. Yes, sir. 

Q. Did they give you any reason why? 

A. They did. 

Q. Could you briefly give what they said re- 
garding leaving Paramount ? 

A. They said that the Paramount organization, 
and particularly Mr. Siberf , had not lived . up to 
his promises to them and that they were leaving 
the organization and, within the eyes of Para- 
mount, they would be the worst so-and-so's in the 
world as of August 1st because they were not only 
leaving the organization and going into a competi- 
tive business, but they were also taking all the 
Paramount employees with them into their busi- 
ness. 

Q. Did you ever see Mrs. Brewer in the office 
of the company? A. Yes, sir. 

Q. What was she doing there ? 

A. Done the office w 7 ork, bookkeeping and an- 
swering the telephone and so forth. 

Q. Did she engage in this conversation you are 
describing? A. She did. 

Q. Did you know who were in the employ of 
Paramount at the time they said they were taking 
the employees with them? A. Yes. 

Q. Who were they? [269] 

A. Mr. Carl Duncan and Mr. Raymond Right- 
mire and Mr. Merriott. 

Q. Do you know whether or not, from any sub- 
sequent knowledge that you had, they did go with 
Mr. Brewer? A. Yes, sir. 



342 Paramount Pest Control Service 

(Testimony of C. W. Fisher.) 

Q. What else, if anything, was said regarding 
their leaving? May I strike that, please? 

Yon said they were taking the employees with 
them. Was anything else said abont the date on 
which they would leave Paramount? A. Yes. 

Q. What was that? 

A. They said they were and they had been col- 
lecting all the money that was on the books that 
they could possibly collect and that if, on August 
1st, there was more than a dollar or two in Para- 
mount's account they would be very lucky. 

Q. Who would be very lucky? 

A. Paramount Pest Control Service. 

Q. Do you know how much was in the Para- 
mount Pest Control account? A. No, sir. 

Q. Was there anything else said about Para- 
mount Pest Control conditions after they would 
leave? A. No, sir, not that I recall. 

Q. Why did they select August 1st as that time? 

Mr. Bernard: Objected to as calling for a con- 
clusion [270] of the witness. 

The Court: Answer. 

A, Will you repeat the question? 

Q. (By Mr. Rankin): Why was August 1st 
mentioned? You say "after August 1st." Do you 
know why August 1st was mentioned? 

A May I explain it in this manner? 

Q. If you wish. 

A. My arrival here was purely coincidental. I 
had been traveling throughout the State of Wash- 
ington and had just arrived in Oregon, establishing 



vs. Charles P. Brewer, et al. 343 

(Testimony of C. W. Fisher.) 

distributors for Sully- Van. Mr. Sibert and Mr. 
Fisher own most of the stock in that corporation. 
At that time I was working in that capacity and, 
when I arrived here on July 30th, Mr. Brewer 
asked me how long it had been since I left the 
Oakland office, and I told him approximately two 
and a half weeks, so he said, "You don't know the 
news, then." 

I told him I didn't and he said he had sent a 
letter of resignation, previous to the date of my 
arrival, to the Oakland office, which would take 
effect on August 1st, 1947. 

Q. And that is the reason August 1st was men- 
tioned ? A. Yes. 

Q. Was anything said about the condition Para- 
mount would be in after the bank account had been 
reduced and the employees taken away, as to their 
rehabilitation? What was said on that score? [271] 

A. It was said that Paramount would be in no 
position to take care of their accounts for some 
months to come. 

Q. Who said that? 

A. Mr. Brewer, because they would not have 
any equipment or stock, nor would they have any 
experienced personnel in this area and, not being 
familiar with the accounts and not* having the 
equipment that our former employees had, it would 
be a tew months before we would ever be able to 
regain our status, at that particular time. 

Q. Was anything said about where they were 
establishing their office? A. Yes. 



344 Paramount Pest Control Service 

(Testimony of C. W. Fisher.) 

Q. Where was that? 

A. In the home, here in Portland. 

Q. What did they say about that? 

A. Well, about all there was — they would have— 
they would establish their business in their home 
temporarily. 

Q. You mentioned something about equipment. 
What did they say about equipment ? 

A. Well, that they intended to keep the equip- 
ment and chemicals until they had been paid for 
that equipment, and that the usual procedure with 
Paramount would be that Paramount would take 
some time to do that, and they were going to keep 
it until they had received their money that was due 
for that equipment and chemicals. [272] 

Q. Did they tell you the amount they claimed 
to be due from Paramount to them? 

A. No, sir. 

Q. Did they say whether or not they had tried 
to get it and had been denied? 

A. Repeat the question. 

Q. Did they say anything about whether they 
had tried to get their money and it had been 
denied them? A. No, sir. 

Q. Do you know of Mr. Hilts coming in, any- 
where in this conversation? 

A. Not this conversation, no. 

Q. When did you first see Mr. Hilts? 

A. Around 4:30 of July 31st in the hotel; he had 
registered in at that time. 



vs. Charles P. Brewer, et ah 345 

(Testimony of C. W. Fisher.) 

Q. That was the next day? A. Yes. 

Q. Were you present when Mr. Hilts and Mr. 
Brewer met? A. I was. 

Q. What was said in Mr. Brewer's presence? 

A. Mr. Brewer was in the lobby and he called 
my room. A few minutes before that Mr. Hilts 
had called me, having just registered, and, as soon 
as Mr. Brewer arrived in my room, I telephoned 
Mr. Hilts' room and asked him to join us because 
Mr. Brewer had arrived. [273] 

Q. What was said in his presence, Mr. Fisher? 

A. Mr. Hilts, upon entering the room, walked 
over to Charlie and shook hands and said that this 
was a bombshell in their organization and particu- 
larly in the home office in Oakland, his resignation 
as of August 1st, and they and no one else could 
understand the reason for his attitude. 

Q. What did Mr. Brewer say? 

A. Mr. Brewer said that he supported- and 
financed Paramount, or the Oregon territory, as 
long as he possibly could and he was getting out 
now for self-preservation. 

Q. Was anything said in Mr. Hilts' presence 
about who might be going with Mr. Brewer in this 
new undertaking of his? A. No, sir. 

Q. What did you do after that with respect to 
the equipment, if anything? 

A. The following morning, August, Mr. Hilts 
and I went to the office and, upon arrival in the 
office, we found some canceling letters and com- 
plaints, cancellation letters. 



346 Paramoimt Pest Control Service 

(Testimony of C. W. Fisher.) 

Q. Whom were those cancellation letters from, 
do you recall ? 

A. One in particular that I recall was the Hud- 
son-Duncan Company account. 

Q. Here in Portland, Oregon % 

A, Yes, sir. 

Q. Go ahead, please, with your statement of 
what you did. 

A. Another complaint that I recall was the Zel- 
lerbach Paper [274] Company here. 

While we were there, Mr. Hilts instructed Mr. 
Celsi — I believe that is the man's name in charge 
of the warehouse — to not permit any of the former 
employees into the office or into the warehouse 
without his consent because we had taken over 
from Mr. Brewer and he was no longer with the 
Paramount Pest Control Service and, upon this 
remark, Mr. Celsi said he couldn't restrain any of 
Mr, Brewer's men or Mr. Brewer from the ware- 
house because he had made the lease and had paid 
the rent. 

There was some question, so Mr. Hilts instructed 
this gentleman to advise Mr. Brewer to come down 
to the warehouse, and that we would be back 
shortly after this complaint call, because that mat- 
ter must be settled. 

So, at approximately 2:00 o'clock in the after- 
noon Mr. Brewer and Mr. Duncan met Mr. Hilts 
and I in the warehouse and at that meeting Mr. 
Brewer instructed Mr. Celsi not to permit us into 
the storeroom until he personally had given consent 



vs. Charles P. Brewer, et al. 347 

(Testimony of C. W. Fisher.) 

for us to do so, so, to alleviate the responsibility 
placed on this man who more or less did not know 
just what to do, we told him we did not want access 
to the warehouse or any of the stuff in the ware- 
house until the entire matter had been settled. 

Q. How long did you remain at Portland, Ore- 
gon, at this time 1 ? A. About thirty days. 

Q. What were you instructed to do, if anything? 

A. Primarily I took care of cancellations of 
contracts. 

Q. You were the first man to engage in an effort 
to understand these cancellations ? 

A. Yes, sir. 

Q. How long were you here as the only man 
doing that ? 

A. Mr. Hilts arrived the next day. 

Q. Did Mr. Hilts work with you in trying to 
retain the company business? 

A. In several cases, yes; not entirely. 

Q. Who had the greatest number of calls to 
make in that regard, you or Mr. Hilts? 

A. Myself. 

Q. How long were you here without any further 
assistance except that of Mr. Hilts, in the capacity 
you have described? 

A. Until Monday in the afternoon. 

Q. What would be the date, approximately? 
How many days, approximately, was that? 

A. I would say it was August 4th. 

Q. Who came then? A. Mr. Sibert. 



344 Paramount Pest Control Service 

(Testimony of C. W. Fisher.) 

Q. Where was that? 

A. in the home, here in Portland. 

Q. What did they say about that? 

A. Well, about all there was — they would have — 
they would establish their business in their home 
temporarily. 

Q. You mentioned something about equipment. 
What did they say about equipment? 

A. Well, that they intended to keep the equip- 
ment and chemicals until they had been paid for 
that equipment, and that the usual procedure with 
Paramount would be that Paramount would take 
some time to do that, and they were going to keep 
it until they had received their money that was due 
for that equipment and chemicals. [272] 

Q. Did they tell you the amount they claimed 
to be due from Paramount to them? 

A. No, sir. 

Q. Did they say whether or not they had tried 
to get it and had been denied? 

A. Repeat the question. 

Q. Did they say anything about whether they 
had tried to get their money and it had been 
denied them? A. No, sir. 

Q. Do you know of Mr. Hilts coming in, any- 
where in this conversation? 

A. Not this conversation, no. 

Q. When did you first see Mr. Hilts? 

A. Around 4:30 of July 31st in the hotel; he had 
registered in at that time. 



vs. Charles P. Brewer, et ah 345 

(Testimony of C. W. Fisher.) 

Q. That was the next day? A. Yes. 

Q. Were you present when Mr. Hilts and Mr. 
Brewer met? A. I was. 

Q. What was said in Mr. Brewer's presence? 

A. Mr. Brewer was in the lobby and he called 
my room. A few minutes before that Mr. Hilts 
had called me, having just registered, and, as soon 
as Mr. Brewer arrived in my room, I telephoned 
Mr. Hilts' room and asked him to join us because 
Mr. Brewer had arrived. [273] 

Q. What was said in his presence, Mr. Fisher? 

A. Mr. Hilts, upon entering the room, walked 
over to Charlie and shook hands and said that this 
was a bombshell in their organization and particu- 
larly in the home office in Oakland, his resignation 
as of August 1st, and they and no one else could 
understand the reason for his attitude. 

Q. What did Mr. Brewer say? 

A. Mr. Brewer said that he supported and 
financed Paramount, or the Oregon territory, as 
long as he possibly could and he was getting out 
now for self-preservation. 

Q. Was anything said in Mr. Hilts' presence 
about who might be going with Mr. Brewer in this 
new undertaking of his? A. No, sir. 

Q. What did you do after that with respect to 
the equipment, if anything? 

A. The following morning, August, Mr. Hilts 
and I went to the office and, upon arrival in the 
office, we found some canceling letters and com- 
plaints, cancellation letters. 



346 Paramoimt Pest Control Service 

(Testimony of C. W. Fisher.) 

Q. Whom were those cancellation letters from, 
do you recall? 

A. One in particular that I recall was the Hud- 
son-Duncan Company account. 

Q. Here in Portland, Oregon? 

A, Yes, sir. 

Q. Go ahead, please, with your statement of 
what you did. 

A. Another complaint that I recall was the Zel- 
lerbach Paper [274] Company here. 

While we were there, Mr. Hilts instructed Mr. 
Celsi — I believe that is the man's name in charge 
of the warehouse — to not permit any of the former 
employees into the office or into the warehouse 
without his consent because we had taken over 
from Mr. Brewer and he was no longer with the 
Paramount Pest Control Service and, upon this 
remark, Mr. Celsi said he couldn't restrain any of 
Mr. Brewer's men or Mr. Brewer from the ware- 
house because he had made the lease and had paid 
the rent. 

There was some question, so Mr. Hilts instructed 
this gentleman to advise Mr. Brewer to come dow T n 
to the warehouse, and that we would be back 
shortly after this complaint call, because that mat- 
ter must be settled. 

So, at approximately 2:00 o'clock in the after- 
noon Mr. Brewer and Mr. Duncan met Mr. Hilts 
and I in the warehouse and at that meeting Mr. 
Brewer instructed Mr. Celsi not to permit us into 
the storeroom until he personally had given consent 



vs. CJiarles P. Brewer, et al. 347 

(Testimony of C. W. Fisher.) 

for us to do so, so, to alleviate the responsibility 
placed on this man who more or less did not know 
just what to do, we told him we did not want access 
to the warehouse or any of the stuff in the ware- 
house until the entire matter had been settled. 

Q. How long did you remain at Portland, Ore- 
gon, at this time'? A. About thirty days. 

Q. What were you instructed to do, if anything $ 

A. Primarily I took care of cancellations of 
contracts. 

Q. You were the first man to engage in an effort 
to understand these cancellations ? 

A. Yes, sir. 

Q. How long were you here as the only man 
doing that ? 

A. Mr. Hilts arrived the next day. 

Q. Did Mr. Hilts work with you in trying to 
retain the company business? 

A. In several cases, yes; not entirely. 

Q. Who had the greatest number of calls to 
make in that regard, you or Mr. Hilts'? 

A. Myself. 

Q. How long were you here without any further 
assistance except that of Mr. Hilts, in the capacity 
you have described? 

A. Until Monday in the afternoon. 

Q. What would be the date, approximately? 
How many days, approximately, was that? 

A. I would say it was August 4th. 

Q. Who came then? A. Mr. Sibert. 



348 Paramount Pest Control Service 

(Testimony of C. W. Fisher.) 

Q. Did Mr. Sibert make any calls on any of 
these customers'? 

A. Not to my knowledge. 

Q. Did you, at any time subsequent to that, 
make any calls on any other customers of Para- 
mount Pest Control Service in an effort to retain 
the Paramount business % [276] 
. A. Yes, sir. 

Q. Who? 

A. Mr. Elfers and I went to the Albers Milling 
Company. 

Q. Anybody else? 

A, Mr. Elfers, Mr. Hilts and myself were the 
only three; we worked together. 

Q. Will you describe to the Court whether or 
not there were many cancellations coming in fol- 
lowing August 1, 1947, and what you did with re- 
spect to those cancellations that did come in? 

A. Well, T couldn't keep up with them. The 
first account I called on was on Friday or Satur- 
day, I guess, on August 1st — whatever the 1st of 
August was. I am a little confused there. On Au- 
gust 1st I called, immediately after finding the let- 
ter of cancellation, on the Hudson-Duncan people. 
It was sent by Mr. Lacey, so I called on that ac- 
count and talked to Mr. Lacey. It is the general 
practice of our company, when we have a cancella- 
tion, to determine the reason for the cancellation, 
and I had found that they had given the account 
to Brewer's Pest Control. That was before noon 
on August 1st. 



vs. Charles P. Brewer, et al. 349 

(Testimony of C. W. Fisher.) 

Q. August 1st? A. Yes. 

Q. Go ahead and describe in a general way — not 
too long or too much in detail — about what you 
generally did in connection with cancellations that 
came in, and what your investigation showed. [277] 

A. I called on between twenty-five and thirty ac- 
counts, and the direct result in every instances-it 
resulted in better than eighty cancellations because 
in those twenty-five or thirty calls there were such 
accounts as the Safeway organization and other' 
companies which had a number of stores that wer& 
under contract for service with our company. ' 

Q. To summarize, what were your findings :'..as 
to the cause of the cancellations'? '■■■ 

A. The same type of service with the same serv- 
icemen, knowing the accounts that had been with 
Paramount, was to continue and take care of them, 
and they would receive the very fine service that 
they had had as the Paramount Company, but it 
would be in the name of Brewer's Pest Control in- 
stead of Paramount. 

Q. I hand you, Mr. Fisher, Exhibits 54 and 55 
that relate to the list of customers and ask you if 
these lists represent any of the customers that you 
had had any dealings with! You have seen them 
before, haven't you? A. Yes. 

Q. This list of customers? A. Yes, sir. 

Q. At that time, did you call any of these that 
are cancelled here? A. I did. 



350 Paramount Pest Control Service 

(Testimony of C. W. Fisher.) 

Q. Without going into the detail of picking 
them out, what you describe as to their termii ation 
applies to those that you called upon? 

A. The Dairy Co-op cancelled. 

Q. Yes; but I say what you describe in general, 
does that apply to all of these? 

A, Yes, in every case. 

Q. There are some letters in there that seem 
to bear the initials, "CWF" or "C. W. Fisher." 
Have you looked through and determined whether 
those are your letters in reply to the cancellations? 

A. Yes. 

Q. What was your effort, and how did you go 
about endeavoring to hold this business ? 

A. Well, I would like to relate one specific in- 
stance, and that is more or less general. 

Q. Yes. 

A. Albers Milling Company, which had been an 
account of ours for several months — I called on 
them the morning of August 4th ; it was Monday 
morning, with Mr. Elfers. On August 1st the ac- 
count had been serviced by Brewer's Pest Control, 
and Mr. Flanagan showed me the service slip of 
Brewer's Pest Control signed by their servicemen 
— it was either Mr. Merriott or Mr. Rightmire, I 
am positive about that — that they had been serviced 
on August 1st. 

So we inquired of Mi*. Flanagan why Brewer's 
Pest [279] Control serviceman serviced the account 
when we had a contract with them and he said he 



vs. Charles P. Brewer, et al. 351 

(Testimony of C. W. Fisher.) 

didn't — he was not there when the service was ren- 
dered and that somebody else had signed the slip, 
and that he would find out at the time of the next 
call why they were servicing the account because, 
as far as he was concerned, he was under contract 
with Paramount Pest Control Service. 

Q. Did you find any other accounts that were 
served by Brewer on August 1st, 2nd or 3rd, or 
immediately after the 1st of August? 

A. Yes, sir. 

Q. Do you have any idea how many of those 
accounts there were that were serviced immediately 
after August 1st? 

A. Everyone I had called on, practically. 

Q. Did Mr. Brewer make any appearance at 
the Paramount Pest Control office at this time? 

A. On two or three occasions he was in to see 
Mr. Hilts with reference to a settlement. 

Q. You were not present when those discus- 
sions were had ? A. No, sir. 

Mr. Rankin: You may cross-examine. 

Cross-Examination 
By Mr. Bernard: 

Q. At this time in July when you came to Port- 
land, July 30th, you were employed then by Para- 
mount Pest Control Service? [280] A. No. 

Q. Whom were you working for then? 

A. Sully- Van Corporation. 

Q. You went to work for Paramount about Au- 
gust 1st? A. On July 30th, I went to work. 



352 Paramotmt Pest Control Service 

(Testimony of C. W. Fisher.) 

Q. As I understand it, out at the house that 
night you found Mr. Eightmire talking to Mrs. 
Brewer and he said he was lucky he had got his 
vacation, or something of the kind? 

A. He said he took his vacation at that time 
because, if he hadn't, he would not have had it as 
an employee of Paramount Pest Control Service. 

Q. Then you went over to the hotel, you and 
Mrs. Brewer and Mr. Brewer, and had dinner, and 
then went up to your room? 

A. That is correct. 

Q. Did you know up to that time that Brewer 
was leaving Paramount? A. Yes, sir. 

Q. He advised you that he had resigned, was 
leaving, saying that Mr. Sibert had not lived up 
to his contracts with him? A. That is correct. 

Q. Did there seem to be some feeling on Mr. 
Brewer's part? A. Very definitely. 

Q. When, if you know, did Paramount Pest 
Control Service get control of the warehouse con- 
cerning which you have spoken? 

A. I don't understand your question. [281] 

Q. When did Paramount Pest Control Service 
procure possession of the warehouse, concerning 
which you have testified? Do you know that? 

A. On Tuesday morning; I think it is August 
5th. Mr. Sibert had met Mr. Brewer in the hotel 
the night before and Mr. Brewer consented to give 
us the keys to the warehouse the following morning. 



vs. Charles P. Brewer, et al. 353 

(Testimony of C. W. Fisher.) 

Q. You testified that prior to that time Mr. 
Brewer had been in several times for a settlement? 

A. Not prior to that time. 

Q. Prior to August 5th? 

A. Not prior to that time. 

Q. Afterwards? A. Yes, sir. 

Q. Do you know anything about the negotia- 
tions back and forth that led to the surrender of 
the warehouse by Mr. Brewer on the 5th? 

A. Only that meeting in Mr. Sibert's room at 
the Roosevelt. He confirmed he would give him 
access to it the following morning. 

Mr. Bernard: That is all. 

(Witness excused.) [282] 

DeGREY S. BROOKS 
was thereupon produced as a witness on behalf of 
plaintiff and, being first duly sworn, was examined 
and testified as follows: 

Direct Examination 
By Mr. Rankin: 

Q. Your name is DeGrey S. Brooks? 

A. Yes, sir. 

Q. Where do you live? 

A. 5728 Northeast Fifteenth Avenue, Portland. 

Q. How long have you lived there? 

A. About two months. 

Q. By whom are you employed? 

A. Paramount Pest Control Service. 



354 Paramount Pest Control Service 

(Testimony of DeGrey S. Brooks.) 

Q. Where did you live prior to the time of 
living here at that address in Porlland? 

A. Spokane, Washington. 

Q. What business were you in in Spokane, 
Spokane, Washington ? 

A. I was manager of the Spokane office. 

Q. Of what company? 

A. Paramount Pest Control Service. 

Q. How long, over all, have you been connected 
with the Paramount Pest Control Service? 

A. About two years. 

Q. When you came to Portland, Oregon, to take 
over the service of the company here, where were 
you living at that time? [283] 

A. I was living at the Roosevelt Hotel. 

Q. Prior to living here, where were you living? 

A. Spokane. 

Q. You were engaged in that work at Spokane? 

A. Yes. 

Q. How did you happen to come to Portland? 

A. I came here the 2nd of August on a vacation 
with my family. 

Q. When were you directed to take over the 
Portland office, as you describe? 

A. I took over the Portland office about the 1st 
of September, I would say, although I arrived here 
on the 11th of August. 

Q. You arrived here on the 11th of August? 

A. The 11th of August and was put directly in 
charge of the office on or about the 1st of Sep- 
tember. 



v s. Charles P. Brewer, et al. 355 

(Testimony of DeGrey S. Brooks.) 

Q. You were here about the 1st of August? 

A. Yes. 

Q. But that was on your vacation'? 

A. Yes. 

Q. Did you meet Mr. Brewer or anyone con- 
nected w 7 ith Mr. Brewer or any of these defendants 
on August 1st, on the 1st of August or thereabouts? 

A. On the 2nd of August I met Mr. Brewer at 
the Roosevelt Hotel. 

Q. What happened there at that time? I wish 
you would just [284] state what occurred. 

A. I had just arrived in town with my family 
on vacation and was in the hotel about a half hour 
when the telephone rang in my room. I answered 
it, and it was Mr. Duncan, calling from Mr. Brew- 
er's room. 

Q. Is that Mr. Carl Duncan? 

A. Mr. Carl Duncan, yes. 

Q. One of the defendants in this case? 

A. Yes, sir. 

Q. Go ahead. 

A. Mr. Duncan — I had asked Mr. Brewer to re- 
serve a room for me, because that is how they hap- 
pened to know I was coming out here, so they 
asked me if I would not come up and spend the 
evening. I didn't want to, but I agreed to later 
on and, after a little while, I went over to their 
room. 

Q. What time did you go to their room? 

A. I would say 7:30 or 8:00 o'clock. 



356 Paramount Pest Control Service 

(Testimony of DeGrey S. Brooks.) 

Q. How long did you reiiain? 

A. I stayed until about 9:30. 

Q. Did you have any conversation with anyone 
there'? A. Yes, sir. 

Q. Who'? 

A. Mr. Brewer and Mr. Duncan and Rosalie 
Brewer, Mr. Brewer's wife. 

Q. Just state what that conversation was, the de- 
tail of it. [285] 

A. When I first went in there, it was sort of 
a social thing for a few minutes, and then Mr. and 
Mrs. Brewer started talking about Paramount Pest 
Control Service, sort of running it down in a way, 
and they went on for a little while. I asked them 
what the trouble was and he said, "You don't 
know*?" He said, "You don't know that we and 
Paramount have severed negotiations'?" And T 
said, "No." 

He said, "I am not with Paramount any more," 
and I said, "I am sorry to hear that. What hap- 
pened?" Well, he didn't tell me so much about 
what had actually happened. The whole trend of 
events w r as trying to discourage me against the 
Paramount. 

Q. What did they say? What was the conver- 
sation leading to that? 

A. They told me what had happened to them; 
that they had put all their money into this business 
and so forth, and Mrs. Brew T er, on a number of 
occasions, would look over at me and say, "For 



vs. Charles P. Brewer, et al. 357 

(Testimony of DeGrey S. Brooks.) 
God's sake, don't ever owe Paramount any money 
because they will put the damper on you," or words 
to that effect, indicating that Paramount was going 
to get me next, and, the fact of the matter is, Mr. 
Duncan took a 5-cent piece that he asked me for and 
I gave it to him, and he placed an additional 5-cent 
piece with it and at least five times that evening 
he would point to this 10 cents and give me about 
six months, and he would bet a drink of beer with 
me that I would [286] be out of Paramount. 

Q. Did they say what they were going to do? 

A. They told me they were going to take a 
vacation. Mr. Brewer told me he was going to take 
a vacation for six weeks and then didn't know what 
he was going to do. He said he had had a number 
of offers, one particularly from the Ardee Main- 
tenance Company, and he would probably accept 
one of them. 

Q. What is the Ardee Maintenance Company 
engaged in? 

A. Competitive pest exterminating. 

Q. Pest control? A. Yes. 

Q. Was anything else said by them that 
evenings ? 

A. Well, nothing whatever — it was just sort of 
a program to try to win me over to their way of 
doing, that they had really been harmed by Para- 
mount Pest Control 

Mr. Bernard: I believe, your Honor, that this 
witness should be required to state what was said 
and not to draw conclusions. 



358 Paramount Pest Control Service 

(Testimony of DeGrey S. Brooks.) 

The Court: Go ahead, and tell your story. 

Q. (By Mr. Rankin) : Did Mrs. Brewer take 
any part in the conversation? 

A. Well, a number of times she spoke up and 
laughed and said, " Don't ever get in debt to the 
Paramount people, " and about after an hour and 
a half I got tired of it and told them the best thing 
to do is to leave good friends, which I did, [287] but 
Mrs. Brew T er said a number of times, "No use try- 
ing to get Mr. Brooks to see our side of it. He is 
a Paramount man." That was said a number of 
times there during the evening. 

Q. What did Mr. Duncan say, if anything, about 
their severance? 

A. Nothing much outside of trying to collect 
10 cents for his beer. 

Q. Did they say when they were going into 
business ? 

A. He told me he was not going into business. 

Q. Who told you that? A. Mr. Brewer. 

Q. Did Mr. Duncan say whether or not he was 
going into business? 

A. No, Duncan told me he didn't know what 
he was going to do, that he was going to take a 
couple of weeks' vacation and go down to the 
wedding of an aunt or somebody in the south, and 
when he came back up here he would then make 
a decision. 

0. Did Mrs. Brewer have anything to say about 
what her future would be? A. No, sir. 



vs. Charles P. Brewer, et al. 359 

(Testimony of DeGrey S. Brooks.) 

Q. Did you talk with them again after this 
occasion ? 

A. I only saw Mr. Brewer once, and he came 
up to my office looking for Mr. Hilts. 

Q. Did he discuss at that time anything about 
leaving Paramount'? A. No, sir. [288] 

Q. Have you told the Court, Mr. Brooks, every 
reason that they gave for leaving Paramount? 

A. Well, they just simply said that they had 
had an injustice done to them, they were busy 
spending their money, they had put thousands of 
dollars into Paramount and had gotten very little 
remuneration from it and they just had enough 
of it. 

Q. Did they say anything about taking the help 
away from Paramount to you? 

A. No, sir, they didn't. 

Q. When did you start in? Did you start in 
subsequently to this on the work of trying to over- 
come the cancellations? 

A. I arrived here the 11th of August and from 
then on I started working on cancellations. 

Q. That was the 11th of August, 1947? 

A. That is right. 

Q. What did you do in an endeavor to stop can- 
cellations ? 

A. Well, we called on them as fast as they 
would come in. If it was a letter or if it was a 
phone call, the boys had to turn in reports on 
their service calls on cancellations of this kind and 



360 Paramount Pest Control Service 

(Testimony of DeGrey S. Brooks.) 

I tried, as soon as possible, to contact all of them 

and find out their reasons for canceling. 

Q. Why would you do it? 

A. A general custom with Paramount Pest Con- 
trol, if you lose an account. We want to know 
whether it is the serviceman's fault or w T hether the 
service has been bad. We want to [289] know 
whether the customer is satisfied or not. 

Q. How long did you work on the matter of 
overcoming these cancellations'? 

A. I am still working on them. 

Q. Have you been in the employ of Paramount 
Pest Control Service here ever since? 

A. Yes, sir, with the exception of just occa- 
sionally running over to Spokane. 

Q. Is that continuous employment here? 

A. Yes, sir. 

Q. Can you state, as a summary of these ac- 
counts that you have contacted, what the reason is 
for their cancellations? 

A. The general reason has been very much the 
same in all cases, those that T have contacted per- 
sonally. It seems as if the men who were servicing 
them were doing a good job, and these same men 
would still come, and the only part that was a 
little unethical was the fact that these same men, 
in many instances, would go in and service the 
account and walkout, have a slip signed, and the 
customer didn't know that it was not Paramount. 
There was no mention made of the fact that this 
was Brewer's Vest Control. The service was ren- 



vs. Charles P. Brewer, el al. 361 

(Testimony of DeGrey S. Brooks.) 
dered by the same man who had been coming 
there, and when they came in again to do the serv- 
ice, why, then he went ahead and did his work and 
had a slij) signed. If the customer did not know 
that there had been a change in name, they could 
have gone on [290] and on and on. 

Q. Did you make any general inquiry as to 
what, if any, representations were made? 

A. Yes, there were many representations made. 

Q. What were those? 

A. You want me to name the customers? 

Q. I don't think that is necessary now. As a 
general summary, give what those representations 
were that caused the cancellations, if any? 

A. The fact that some of the servicemen, in 
some instances, would go in and say the company 
was dissolving. 

Q. What do you mean by " company"? 

A. That we are not going to continue in busi- 
ness; we are discontinuing business up here. 

Q. What do you mean by " company"? 

A. The Paramount Pest Control Service. 

Q. That the Paramount Pest Control Service 
was dissolving? 

A. Yes. In other cases he would go in there and 
service the account; if it was the same man. they 
never thought about it. 

Q. Anything else you can think of that your 
investigation showed as to the reasons for cancel- 
ing Paramount contracts? 



362 Paramount Pest Control Service 

(Testimony of DeGrey S. Brooks.) 

A. No, other than that the same personnel was 
serving these accounts and that Mr. Brewer or his 
representatives would walk in and say they were 
taking the account over on such and such [291] a 
date, and it would be known as Brewer's Pest Con- 
trol Service. 

In one case, particularly, they told the man that 
they were taking over, and that we were discon- 
tinuing business, that Paramount Pest Control 
Service was not a company, it was a trade name, 
they were changing their forms to Brewer's Pest 
and, instead of paying a royalty on this trade name, 
Control, and in each case they gave the man a 
discount on the regular cost of his services to prove 
that they were saving him a little money. 

Q. As manager in charge of this office, Mr. 
Brooks, did you have any cancellations that called 
for any repayment of money ? A. Yes, sir. 

Q. Describe those, please? 

A. We had a number — In fact, we have got sev- 
eral thousand dollars on the books of moneys rtill 
due on accounts that are unpaid, if that is what 
you mean. 

Q. Did they write in and say, "We have had 
your service and we don't owe you this money"? 

A. Oh, yes. 

Q. Did you have any cases where there was a 
repayment by you to the customer? Did you have 
any cases where there was a repayment by you 
to the customer who had already paid for the 
service? 



vs. Charles P. Brewer, et al. 363 

(Testimony of BeGrey S. Brooks.) 

A. Not repayment. We gave him credit for 
service, and rendered service for which we got 
no bonus. [292] 

Q. Why not? 

A. Why — Well, it had been paid in advance; 
they had paid up several months, those where they 
had paid several months in advance; that happens 
lots of times. 

Q. Had nothing to do with Brewer? 

A. No, had nothing to do with Brewer. 

Q. Did you have any cases where you had to 
remit to them because Brewer had done the serv- 
ice and you had not done it and you remitted any 
part that had been paid ? .• : i ' i 

A. No. I have not refunded any money, i A 

Q. As manager of the office, did you find all 
the records there when you come to the office to 
start work there? 

A. I found records but I wouldn't say that the 
records were complete. 

Q. Why not? 

A. Well, for our service routings, the cards the 
men turned in as to where to go on certain dates, 
and so on, they were many of them blank. There 
was the name of the customer on there but there 
was no way of determining whether they had had 
service or not. In other cases, the cards were dated 
up in September and October — you could not get 
any detail from them, ond we had to go- to the 
ledger and look them up and work our routings 
over from the ledger. 



364 Paramount Pest Control Service 

(Testimony of DeGrey S. Brooks.) 

Q. Did you find any substitions in your records, 
where the original records are gone and something 
substituted for them? [293] 

A. Just had cards with the names on but didn't 
have any detail whether they were accounts or any- 
thing. I wouldn't say whether it was substituted 
or what happened. That was the way Mr. Brewer 
had run the office. 

Mr, Rankin: You may cross-examine. 

Cross-Examination 
B}' Mr. Bernard : 

Q, As I understand it, you talked with Mr. and 
Mrs. Brewer on the evening of August 2nd? 

A. I believe so. 

Q. And you want the Court to understand that 
he did not tell you at that time that he was in 
the pest control business? 

A. No, sir, he didn't. 

Q. Bid you see Mr. Wendy Fisher about that 
time? A. I did, sir. 

Q. Did Mr. Fisher ever tell you he had told him 
on July 30th that he was going into the pest control 
business ? 

A. Mr. Fisher didn't tell me that until after 
I had seen Mr. Brewer. 

Q. There seemed to be quite a lot of feeling that 
night on the part of Mr. and Mrs. Brewer? 

A. That is right, sir. 



vs. Charles P. Brewer, et al. 365 

[Testimony of DeGrey S. Brooks.) 

Q. They said they had been treated badly by 
Paramount Pest Control Service; in other words, 
in your own words, I believe you said the net re- 
mit was that they said an injustice had [294] been 
lone them. A. Yes, sir. 

Q. And Mr. Brewer, particularly, was quite 
worked up over the proposition? A. Yes, sir. 

Q. You have testified that a certain unnamed 
man told you that somebody told them that the 
reason Brewer was taking over w^as because Para- 
mount was dissolving. Will you give us the name 
}f this customer or former customer of Paramount 
who told you that? 

A. The Sugar Bowl in The Dalles. 

Q. Who up there told you that? 

A. The manager and owner of the Sugar Bowl. 

Q. What is his name? 

A. I don't know what his name is. I would 
have to look it up. 

Q. Who else told you that? 

A. I think that is sufficient. 

Q. You mean that is sufficient, or is that the 
only one? 

A. That is a case that can be tested, taken up 
and the man will verify it. 

Q. I am asking you to give us the names of 
any other former customers who ever made that 
statement to you ? 

A. I will say that is the only one that made 
that particular statement. 



366 Paramount Pest Control Service 

(Testimony of DeGrey S. Brooks.) 

Q. Is that the one who made the statement also 
that Paramount [295] was really just a trade name 
here, just using the trade name "Paramount"? 

A. That is correct, sir. 

Q. Separate and apart from those, you told the 
Court that several customers or former customers 
had told you Paramount was dissolving. Will you 
give us the names of any customers or former cus- 
tomers, or customer, who told you that anybody 
connected with Brewer said Paramount was 
dissolving? 

A. Peasley Transfer Company, Mr. Davidson, 
Boise, Idaho. 

Q. Where in Idaho? A. Boise, Idaho. 

Q. Who else? 

A. The manager of The Dalles Hotel in The 
Dalles. 

Q. Who was it? Do you know his name? 

A. I don't know his name. 

Q. Who else? 

A. I think that is all I can recall right offhand. 

Q. Did anybody in Portland tell you that? 

A. I didn't really do much in Portland. Mr. 
Fisher was working Portland and I was working 
out in the country on the Eastern run when I first 
came up to this job. 

Q. Did you talk to Mr. Flanagan of Albers 
Milling Company? A. No, sir, I didn't, 

Q. Whose deposition was taken the other day? 

A. No, sir, I don't remember him now. [296] 



vs. Charles P. Brewer, et cd. 367 

[Testimony of BeGrey S. Brooks.) 

Q. You spoke about the index cards. You said 
iiat some of these cards or as to some of these 
?ards the dates did not appear; it did not appear 
m what date the customer was supposed to he 
serviced, is that it? A. That is right, sir. 

Q. You do not want the Court to understand 
:hat there were some of the records of Paramount 
Pest Control Service that had been taken out of 
;hat office? A. They were not in the office. 

Q. What records? 

A. We had an index file in which we have a 
5 by 7 card that is marked up by months, January, 
February, March and so forth, and every time a 
serviceman does a job he comes in and makes his 
report on his service card. The office girl will take 
:hat and post that on the index card so that when 
flie man makes his rounds again he knows the last 
;ime he has been there or when it has been serviced, 
in order to keep our service uniform. 

Q. Anyway, some of these cards at that time 
lid not happen to show the date ? 

A. That is right, sir. 

Q. You did not find any cards of any customers 
missing, did you? 

A. Well, I wouldn't say, no. I can't remember 
no names. 

Q. You said some of these cards had been dated 
up to September [297] and October. What did you 
mean by that? 

A. There would be many cards with the name 
m it, the service contracts that we had on our books, 



368 Paramount Pest Control Service 

(Testimony of DeGrey S. Brooks.) 
and the date of the last call would be September 
or October, which was two months prior to the 
time 

Q. You could understand by looking at it that 
those calls had not been made, of coursed 

A. I didn't know whether they were made this 
year or last year. 

Mr. Bernard: I think that is all. 

Redirect Examination 
By Mr. Rankin : 

Q. I should have asked you one other question. 
Referring to Exhibits 54 and 55, you have seen these 
before? 

A. Yes. I don't know which ones you are re- 
ferring to, though. 

Q. Exhibits 54 and 55. A. 54 and 55? 

Q. Who compiled these lists, do you know? 

A. These lists are compiled in our office by the 
bookkeeper. 

Q. Under whose direction? 

A. Under my direction and also I would say 
Mr. Walt Moore who had something to do with 
them. 

Q. Did Mr. Hilts have anything to do with them? 

A. Sir? 

Q. Mr. Hilts. There are letters in there marked 
" DeGrey [298] Brooks.'' Can you identify those 
as copies of the originals that you originally signed? 

A. Yes, sir. Those are letters acknowledging 
cancellations of contracts. 



vs. Charles P. Brewer, et al. 369 

(Testimony of BeGrey S. Brooks.) 

Q. Generally speaking, wherever that name or 
initials appear, they are letters written by you, is 
that correct? A. That is right, sir. 

Mr. Rankin: That is all. 

Recr oss-Examination 
By Mr. Bernard: 

Q. Can you give me the name of the man who 
was supposed to have made these representations 
to the Sugar Bowl, the Peasley Transfer Company 
or The Dalles Hotel? 

A. The names of the parties themselves? 

Q. Yes. 

A. They were the owners or the managers of 
these particular places. I don't know them per- 
sonally by name. 

Q. Did they give you the name of the person 
connected with Brewer? A. Never did. 

Q. The name of the person connected with 
Brewer who made this statement ? 

A. No, sir, they didn't say which man it was. 
In one instance I believe Ray Rightmire's name 
was signed to a slip, a service slip, and that was in 
The Dalles, I believe. [299] 

Mr. Bernard: That is all. 

(Witness excused.) 



370 Paramount Pest Control Service 

HAROLD W. HILTS 

having been previously duly sworn, was recalled 
as a witness on behalf of plaintiff and was ex- 
amined and testified as follows: 

Direct Examination 
By Mr. Rankin: 

Q. Mr. Hilts, you testified the other day to 
some eleven agencies of the Paramount Pest Control 
Service. Can you describe more in detail those 
agencies'? You had not completed your statement 
about them. 

A. Yes, sir. There are agents that we have 
operating under franchises 

Q. The franchises that you described, do they 
bear any resemblance to the franchise which was 
had by Mr. Brewer and dated July 1st, 1946? 

A. Yes, sir, with the exception of the name of 
the manager or the man that it was franchised to, 
and the boundary lines, they are practically abso- 
lutely identical. 

Q. How many franchises of that identical nature 
are in existence'? A. Eight. 

Q. Are there any franchise managers who have 
ever gone broke? [300] A. No, sir. 

Q. Have any of them ever made any money? 

A. Very definitely so. 

Q. Can you give the Court a general idea of 
the maximum return that has been made under a 
franchise and the minimum return made under a 
franchise in your business? 



vs. Charles P. Brewer, et al. 371 

(Testimony of Harold W. Hilts.) 

A. The maximum amount of money that has 
ever been made by any one of our franchise opera- 
tors, in round figures — I don't remember exactly, 
but it will run from $22,000 to $24,000 annually, 
a year. 

Q. And the minimum? 

A. The minimum amount of any one of our 
operators is upwards of $6,000. 

Q. Have any of those ever resigned or left you? 

A. Not at all, sir. 

Q. Never once? {. 

A. Not of the eight. We had a resignation of 
a manager of ours who was operating in Sacra- 
mento who made $14,000 in 1945, and he decided 
he wanted to become a missionary, so he resigned 
and left the organization. 

Q. He was not broke when he left? 

A. Not by a long shot. 

Q. What kind of a contract was he under f 

A. A franchise contract, the same as Mr. Brewer 
had. 

Q. Mr. Brewer came up under a different kind 
of an agreement, [301] when he came here. What 
do you call it? 

A. It was a franchise manager's contract. 

Q. How many of those do you have in existence! 

A. Now? 

Q. Yes. A. Three. 

Q. Have any of the franchise managers ever 
gone broke? A. No, sir. 



372 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. Have they made money? 

A. Yes, sir, they have. They have made more 
than wages. 

Q. Have you had any of those cancel out or 
leave the service? 

A. Oh, occasionally one does. 

Q. With particular reference to Mr. Osborn, did 
you inspect his books'? A. Yes. 

Q. Did you make an audit from them? 

A. Yes, sir, I did. 

Q. He has returned to Seattle? 

A. Yes, he has. 
' Q. Do you know whether or not he is making 
money? A. Why, certainly he is. 

Q„ Was he ever broke as Mr. Brewer indicated 
the other day? 

A. Not to my knowledge. I have never seen him 
broke. 

Q. Have you continuously inspected his books? 

A. His books have never indicated he was broke. 

Q. Now, on the matter of damages, state whether 
or not you have prepared any statement that would 
indicate the obligations of Mr. Brewer to Para- 
mount? A. Yes, we have. 

Q. Page 14, Paragraph 6, subparagraph (l)(a) 
of the complaint alleges that there is a balance due 
Paramount from Mr. Brewer as of June 30, 1947, 
in the sum of $3,100. Have you an exhibit that 
shows that obligation? A. Yes, there is. 

Q. There is produced for your inspection Ex- 
hibit 36. A. Now, I have it. 



vs. Chwrles P. Brewer, et al. 373 

(Testimony of Harold W. Hilts.) 

Q. What is the total obligation shown by that? 

A. $3,359.61. 

Q. Was there any payment on that? 

A. Yes, there was a payment of $259.61 on July 
9, 1947. 

Q. That is the payment you have previously 
described? A. Yes. 

Q. That left a balance of what? v 

A. $3,100. 

Q. Has that ever been paid? A. No, sir. 

Q. Paragraph 6, subparagraph (l)(b) of the 
complaint is an allegation of a balance due under 
the franchise for July, 1947. Did you prepare any 
exhibit to disclose that? 

A. Yes, sir, I did. [303] . • 

Q. What is that exhibit? You might look at 
Exhibit 39. A. 39? 

Q. Yes. 

A. It must be out of order. I can't seem to 
locate it. 

Q. Here it is, right here. A. Thank you. 

Q. What does that show? 

A. Shows the total amount due, $478.15, based 
on the franchise "Contract for July, 1947. 

Q. For what month? A. July. ; 

Q. For the month of July, 1947? A. Yes. 

Q. Where did you get that figure ? 

A. From the books. 

Q. Whose books? 

A. From Mr. Brewer's books, the books in the 
Portland office. 



374 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. Has that amount been paid? 

A. No, sir. 

Q. There is a claim here, one for difference be- 
tween the investment, and the other for fixed as- 
sets not turned in as per contract. Are those on 
the same basis'? What about those claims'? Look 
at Exhibits 50 and 51 and explain it to the Court, 
please. 

A. Exhibit 50 is the total amount of assets on 
the records, less depreciation. The depreciation is 
figured on the accounting rules [304] set forth by 
the Federal Government. 51 

Q. 51. I am in error. I have not reached that 
yet. Explain these two claims, for $259.63 and 
$973.30, as to whether or not they are obligations 
of Brewer and, if so, how? 

A. $259.63 and $973.30 interwind with each 
other. The $973.30 represents the equipment that 
was not turned in by Brewer as per his contract. 

Q. Have you any exhibit on that? 

A. Yes, sir. 

Q. What is the exhibit number'? Is it 50? 

A. Yes, it is. It is the next half of 50. 

Q. Have you anything further to state in re- 
gard to that? 

A. It shows on the exhibit, the second half of 
Exhibit 50, that there was a 1936 Plymouth car, 
a "Hi-Fog" exterminator and service unit, a spray 
rig and a two-wheel trailer, also the additional cost 
of trailer and one Dobbins pump, single-phase, that 



vs. Charles P. Brewer, et al. 375 

(Testimony of Harold W. Hilts.) 
are all recapped in the figure $973.30. That is, of 
course, the book value which means the deprecia- 
tion is figured and figured in as expenses. 

Q. The fifth item on page 15 of the complaint, 
Paragraph 6(e), refers to an expense account of 
certain items. You say those items amount to 
what? A. $925.89. 

Q. Have you an exhibit to disclose that? 

A. Yes, it is on Exhibit 51. [305] 

Q. Explain why that is a charge here. 

A. The reason for this being a charge is because 
they are unsupported expenditures. In other words, 
checks were drawn, as the exhibit indicates, the 
check number and the date on which drawn and to 
whom they were paid, but with no supporting evi- 
dence of the expenditure. Therefore, according to 
accounting procedure, when there is no supporting 
evidence, they have to be charged. If there is no 
supporting evidence, it is charged to the owner of 
the business as his drawing account, under account- 
ing practice. 

Q. The next item on page 15 of the complaint, 
Paragraph 6(1) (f), evidently relates to the East- 
ern Oregon run. You have testified about this 
Eastern Oregon expense and the agreement? 

A. Yes. 

Q. Does this relate to expenditures incurred in 
the performance of that agreement? 

A. Not expenditures, but the income. 



376 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. Describe it then, in detail. 

A. This one, amounting to $678.50, is one-half 
of the income that was derived from the Eastern 
Oregon run as per Mr. Brewer's understanding of 
a split of the income and expense of that venture, 
putting on new business. The expense item is 
wn under the June 30th settlement of $3,100 
and the income we had never received which we 
were entitled to, and therefore it is in this item. 

Q. What exhibit discloses this obligation? 

A. Exhibit 51. 

Q. Exhibit 51-A, does that have any bearing 
on it? Does Exhibit 40 or 40-A? 

A. 40 and 40-A do not. I wifl see what 51-A 
shows. Yes, 51-A indicates the amount of revenue 
derived from the Eastern Oregon run for the 
months of February, March and April, giving the 
number of accounts handled and also the total 
volume for those months. 

Q. (By Mr. Bernard): 51-A? 

A. Yes, 51-A. 

Q. (By Mr. Rankin) : No. 51, does that have 
any bearing on it? 

A. No, sir, 51 is the $925.89 unsupported. 

Q. 51-A is the only exhibits which sets out in 
detail this Eastern Oregon operation? 

A. Correct. 

Q. Page 16, Paragraph 6(2) (a), does that ex- 
plain that? A. Which one is that? 



vs. Charles P. Brewer, et al. 377 

(Testimony of Harold W. Hilts.) 

Q. Paragraph 6(2) (a), which reads, " * * * 
plaintiff sent men into said territory to interview 
and hold such accounts as plaintiff could and the 
action of said defendants, as herein described, dam- 
aged plaintiff in the amount of said expense, con- 
sisting of $3,596.95. " 

Please explain that, will you ? 

A. Well, when we found out what had actually 
happened to us, [307] what had really been done, 
w T e had to protect our business, naturally, as any 
business organization would. 

Therefore, we had to import people into the area, 
experienced men and people familiar with the busi- 
ness, to carry on, and also determine just exactly 
where we did stand, as far as our accounts were 
concerned. 

We are a service organization. We do not sell 
a commodity. Therefore, our business is erected 
around our personnel, and whenever we realize in 
our business that our personnel is in way not right 
in relation to the customers, then we try to deter- 
mine what the situation is and, therefore, under 
the situation that we ran into here in Portland, we 
were naturally anxious to find out just as soon as 
possible from all of our customers just where we 
stood, which has been borne out in earlier testi- 
mony. This is the amount involved in bringing 
people that were necessary here to find this out 
and to protect our accounts and our business. 

Q. Have you made an exhibit for that? 

A. Yes. 



378 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. Have you detailed in that exhibit what the 
expenditures were for? A. I believe so. 

Q. Look at Exhibit 53 and see if it covers every 
item that you have mentioned covering expenses in 
an effort to hold the business? [308] 

A. Yes, it indicates my time and that of Andy 
LePape, Carl Dolby, W. T. Moore, DeGrey Brooks, 
whom we brought from Spokane, and Mr. Fisher 
who happened to be here and of course went right 
on our payroll, and Mr. Elfers whom we brought 
from Seattle, Mr. Sibert and Mr. G. H. Fisher. 

Q. Is that total set forth in Exhibit 53? 

A. Yes. The total is set forth. It is set forth 
in detail, in fact. It indicates the expenses for 
hotels and meals and automobile expenses necessary 
to carry on. 

Q. How much does that amount to? 

A. A total of $3,596.95. 

Q. The next item on page 16, Paragraph 6(2) 
(b), having to do with contracts having a balance 
of the year to run. There are in evidence here lists 
contained in Exhibits 54 and 55 of the contracts 
that were canceled. Some of these contracts that 
they had some time to run. 

The Court : Recess until 1 :30. 

(Thereupon the Court was recessed until 
1:30 o'clock p.m.) [309] 



vs. Charles P. Brewer, et at. 379 

(Testimony of Harold W. Hilts.) 

Court Reconvened at 1:30 o 'Clock P.M. 
January 23, 1948 

Direct Examination 
(Continued) 
By Mr. Rankin: 

Q. Have you the list of accounts'? 

A. Yes. 

Q. You spoke to me during the noon hour of 
something you wanted to make clear. What was 
that? 

A. I wanted to be clearly understood — I don't 
think I have made it quite clear — relative to Item 3 
of damages. Item No. 3 is contained in Item 4. 

Q. So, in place of $259.63 and $973.30 there is 
just the item of $973.30? A. That is right, 

Q. When we recessed at noon we were about to 
discuss Paragraph 6(2) (b), on page 16 of the com- 
plaint, relating to contracts having a balance of one 
year 

A 

Q 
Q 

A 

Q 
Q 

A 



to run. Have you Exhibit No. 54? 

Yes, sir. 

Who compiled Exhibit 54 ? A. I did. 

What does it show as to total ? 

Shows a total of $4,596.75. 

That is $4,596.75? A. Yes. [310] 

What is that figure? 

That figure represents contracts that were 
still in effect and had time to run, after Mr. Brew- 
er's action, and which we lost. 

Q. How long did they have to run? 



380 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

A. Various times. They are enumerated there, 
the account number, the date of the contract, the 
amount of the monthly charge, and the balance of 
the term of the contract, also the balance of the 
amount of revenue that would have been involved 
in it. 

Q. State whether or not this $4,596.75 represents 
the face of the contracts'? A. Yes, it does. 

Q. Does it represent the amount of profit that 
Paramount Pest Control Service would have re- 
ceived? A. No, sir. 

Q. Can you figure the amount of the profit that 
Paramount Pest Control Service would have re- 
ceived under those contracts that were canceled 
within the year? 

A. Yes. According to our experience rating and 
the way our business is set up to operate, we could 
expect 40 per cent profit on the face of these con- 
tracts. 

Q. How much does it take to process or serve 
these contracts ? A. 60 per cent. 

Q. Is that the accepted standard in your busi- 
ness, or is that [311] something exceptional that 
you are applying to this case? 

A. Not a bit exceptional. It is more or less 
standard. Sometimes it varies a few points one way 
or the other. 

Q. That is, the total amount, $4,596.75 repre- 
sents the face; so far as profit is concerned, it 
would be 40 per cent of that that would be returned 
to Paramount ? A. Yes, sir. 



vs. Charles P. Brewer, et al. 381 

(Testimony of Harold W. Hilts.) 

Q. How many contracts is that figure based on? 

A. I have not counted these contracts. I can 
say that this item, $4,597.75, and the next item, 
$566.50, represent a total of 185 accounts. 

Q. How many of those contracts are admitted 
by Mr. Brewer in his answer to have been taken 
over by him % A. 141. 

Q. What are those additional contracts in that 
$4,596.75 item that are not admitted by him? 

A. Well, there is quite a number of them — 44, to 
be exact, such as Schuster Brothers. 

Q. You need not go through an enumeration of 
the 44. You have testified the cost of those is 60 
per cent. Can you break down that 60 per cent any 
further? A. Yes. 

Q. How ? 

A. Figure in 60 per cent an average of 38 per 
cent being for servicing the contracts and 22 per 
cent being for the overhead [312] operation of the 
business. 

Q. Give a general statement, not too much in 
detail, as to what is included in overhead. 

A. Well, in overhead there is the office girl, ad- 
vertising, telephone and telegraph, insurance, taxes 
and licenses, depreciation and quite a number of 
other items 

Q. That is sufficient. 

A. If you will let me refer to the exhibit, I can 
enumerate them all. 



382 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. They will inquire further if they wish. Does 
that overhead continue in spite of cancellation of 
contracts? A. Yes, sir. 

Q. Who paid the overhead? 

A. Well, during Mr. Brewer's contract Mr. 
Brewer paid for it. During our contract, we paid 
for it — After Mr. Brewer left us, we had to pay 
for it. 

Q. What do you include in the 38 per cent 
service % 

A. There is wages for servicemen, materials and 
chemicals to be used on the job, traveling expenses, 
such as hotels, rooms and meals. 

Q. As to these contracts, you say after his sev- 
erance you paid the overhead. How about the serv- 
ice? Did you service these contracts afterwards? 

A. No, sir, but we had to have personnel servic- 
ing these contracts. [313] 

Q. Who took the servicing of the contracts over ? 

A. We did. We had our organization here. 

Q. Yes, but who actually serviced them? 

A. Mr. Brewer was servicing the contracts. 

Q. Then, in that $4,500 item, or practically 
$4,600 item of damage, all that you were relieved 
of was the service or 38 per cent? 

A. That is correct. 

Q. Take the next item on page 16, paragraph 
(c), contracts exceeding one year to continue on a 
per-month basis. Pardon me just a moment. Strike 
that. 



vs. Charles P. Brewer, et al. 383 

(Testimony of Harold W. Hilts.) 

That $4,596.75 item broken down to 38 per cent 
of that is contained in what exhibit ? 

A. It is contained in Exhibit 54. 

Q. Now, take the next item, contracts exceeding 
one year to continue thereafter until completed, 
under the terms of the contract on a month-to- 
month basis. How many of those did you find that 
had not expired? 

A. How many contracts ? 

Q. The amount of them is more important. 

A. $566.50. That is just the monthly service in- 
volved in those contracts. 

Q. Is that set forth in any exhibit? 

A. Yes, sir, it is Exhibit No. 55. 

Q. Over and above these items, can you advise 
the Court whether [314] or not the business in gen- 
eral suffered a damage? A. Yes, sir. 

Q. What kind of damage, and can you give an 
estimate of how much? 

A. Well, we suffered a damage of approximately 
$1,500 per month, in round figures. We feel that, 
according to our experience rating, over a period of 
years' operation, that the accounts which stay on 
the books over a period of years run 60 per cent, 
that the customers we retain is 60 per cent. There- 
fore, on the basis of 60 per cent of $1,500 would be 
about $900 and, taking into consideration the bal- 
ance of the term of the contract, which would have 
been eight years and eleven months, we have suf- 
fered a damage I feel of $96,300. 



384 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. That is over the entire period of time? 

A. Yes, sir. 

Q. There is a claim by Mr. Brewer of some $700 
and another of some $1,350. Did you take credit on 
those into consideration? 

A. Yes. That totals about $2,050, and we have 
allowed for that. 

Q. How ? 

A. Well, there was the amount of money that 
Mr. Brewer received and had taken out of the 
business. 

Q. You heard the testimony the other day when 
he said he had taken out $1,000 of investment, and 
how much more ? [315] 

A. Well, he had taken out approximately, ac- 
cording — According to the records he has taken out 
over $4,500. 

Q. How much was left in the bank on August 1, 
1947, when Mr. Brewer started in for himself, in the 
account of Paramount Pest Control Service ? 

A. In accounts receivable ? 

Q. No, in the bank account. 

A. In the bank account? 

Q. Yes. 

A. Oh, right around $4.00. There were two bank 
accounts. One of them was the payroll account and 
the other was the general account and the total 
amount left in the bank in these two accounts was 
around $4.00. 



vs. Charles P. Breiver, et al. 385 

(Testimony of Harold W. Hilts.) 

Q. How much did he draw in July, 1947, do you 
know ? 

A. Over $1,000, $1,017 and something. 

Q. Some time at the beginning of this trial, Mr. 
Sibert mentioned Mr. Brewer's visit to his home 
when he purchased airplane tickets for Mr. Brewer, 
and Mr. Brewer says he purchased those himself. 

Will you, very quickly, give a statement as to 
whether you looked that matter up and what you 
found? 

A. Yes, I checked the checks which Mr. Brewer 
claims in his testimony had been drawn for these 
airplane tickets. There are three checks. In fact, 
one of them was to pay for a tire and the other one 
was for $50, and the other one was for $100. [316] 
The one for $100 was drawn the day after Mr. 
Brewer had left Portland for Oakland. 

Q. Are these the three checks mentioned by Mr. 
Brewer % 

A. Yes. They are numbered 398, 399 and 400. 

Q. Did you look up the record as to the airplane 
tickets that were purchased? 

A. Yes, sir. They were purchased by Mr. Sib- 
ert from his personal credit, and I happened to be 
present when he was doing so. 

Q. Were they billed to Mr. Sibert? 

A. They were billed to Paramount Pest Control 
Service. This credit is in the name of Mr. Sibert of 
Paramount Pest Control Service. 



386 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. The Paramount Pest Control Service paid 
for them, according to the record? 

A. Yes, sir, they did. 

Mr. Rankin: You may cross-examine. I do not 
believe it is necessary to introduce these records. 
They arc available if counsel cares to see them. 

Mr. Bernard: May I have Exhibit 36? 

Cross-Examination 
By Mr. Bernard: 

Q. Can you tell me, in round figures, the gross 
amount of business done by the Portland — I will call 
it the Portland branch office — in the thirteen months 
Mr. Brewer was here ? [317] 

A. Not without looking at the records. I believe 
it would run upward of $35,000. 

Q. Mr. Brewer stated it would run, in round 
figures, $35,000. Do you think that is substantially 
correct ? A.I think it is pretty close. 

Q. You were here how often during those thir- 
teen months? I will sa}% prior to July 1, 1947? 

A. Well, I was here in May, in April and March, 
in January, December, November and October and 
again in May of 1946 and April of '46. I brought 
Mr. Brewer up here around the 1st of April, 1946. 

Q. Mr. Brewer has testified nobody connected 
with the company ever made any complaint with the 
way he was handling the business. Did you ever 
make any complaint to him about the way the busi- 
ness was being conducted? 



vs. Charles P. Brewer, et ah 387 

^Testimony of Harold W. Hilts.) 

A. I did not complain to him. I tried to show 
lim on various occasions how it could be operated 
nore profitably. 

Q. In what way? 

A. It is not my policy to complain. 

Q. What suggestions, generally, did you make to 
lim? 

A. Well, in the line of expenses and in the way 
)f help and taking the men in and seeing that they 
^ot started correctly so that it is inexpensive. 

Q. Did you think he had to have help or use 
aelp in the Oregon district? [318] 

A. Yes, at various times he did. 

Q. How many men do you think he should have 
lad? 

A. It would depend on the volume of business 
md that changed from month to month. 

Q. What was the greatest number of help Mr. 
Brewer had at one time ? 

A. I really don't know, offhand. 

Q. His territory took in all of Oregon? 

A. That is correct. 

Q. You said Mr. Brewer drew around $4,500 
iuring the year. How was that made up, Mr. Hilts ? 

A. Well, he drew^ over $2,500 the last seven 
months of 1947; he drew $1,000 the last six months 
3f 1946. 

Q. He drew what? 

A. There may be a correction. I might have 
said the last part. I meant the first seven months 



388 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 
of 1947 he drew over $2,500; the last six months 
of 1946 he drew over $1,000, and that is shown on the 
record of drawings. 

Then there was an additional amount of $925 of 
unsupported expenses that we considered was a 
drawing. 

Q. On Exhibit 36 it shows " Brewer drawing, 
$2505.55." What period of time does that repre- 
sent? 

A. From January 1st, 1947, to June 30, 1947. 

Q. That just covers the period of six months'? 

A. That is correct. No, I beg your pardon. I am 
wrong there. [319] It covers the period of from 
July 1st, 1946, to June 30th, 1947. I would like to 
have that exhibit to refresh my memory. I can't 
remember figures too well. 

Q. This exhibit purports to cover a year instead 
of six months ? A. That is correct. 

Q. It says here "Plus Brewer drawing, 
$2505.55. " What does that figure represent? 

A. That figure represents his drawings record on 
the books from July 1, 1946, to June 30, 1947. 

Q. One year? A. That is correct. 

Q. You say, then, he drew in July, 1947, how 
much? A. Over $1,000. 

Q. The only other item which you add to that 
is this $925 which you say is unsupported by 
vouchers? A. That is right. 

Q. Was he repaid the $1,000 that he put in at 
the start? A. He was repaid in the $4,500. 



vs. Charles P. Brewer, et al. 389 

(Testimony of Harold W. Hilts.) 

Q. Well, did he withdraw any $1,000 in addition 
to this $2,505.55 and $1,000 in July? 

A. I don't know. 

Q. The point I am making is : If he was repaid 
the $1,000, it has to be deducted from the amount of 
these drawings that you have shown here. 

A. That is right. [320] 

Q. If we deduct the $1,000 from the amount he 
withdrew in July, the total amount Mr. Brewer drew 
during the life of the contract would be $2,505.55) 
plus any balance over and above $1,000 in July, 
1947, and any portion of this $925 which is prop- 
erly charged against him ? 

A. Yes, and we only got $994. 

Q. What do you mean by that? 

A. That is all we ever got out of it. 

Q. Well, where did you get that? 

A. That was the amount of the January aind 
February, 1947, franchise, total $994.25. 

Q. How 7 much money have you — When I say 
"you" I mean the Paramount Pest Control Serv- 
ice — collected on contracts since August 1, 1947; 
I mean contracts that existed prior to that time on 
work done by Mr. Brewer ? '•'•■''. 

A. Less than $1,500. 

Q. Can you give us the exact figure ? 

A. No, I can't exactly. That is right aroiind 
under $1,500. I don't know exactly the figure. 

Q. About $1,500? A. That is right. : ' 

Q. There was paid to you how 7 much, by Mr. 
Brewer? A. I didn't imderstand. 



390 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. There was paid how much by Mr. Brewer? 
You say $900-odd? A. $944.25. [321] 

Q. So you have received $994.25 plus about 
$1,500? A. That is right. 

Q. That is correct? 

A. There was also another payment made on the 
settlement of $259.61. I didn't take that into con- 
sideration when I answered you. 

Q. Anyway, you have received, in addition to 
the amount set forth here that he was given credit 
for, you have received approximately $1,500 in ad- 
dition to that? 

A. I don't get your question. I am sorry. 

Q. There are certain payments that it is con- 
ceded in the pleading and by everybody that Mr. 
Brewer made. In addition to those, Paramount 
Pest Control Service has received about $1,500 in 
collections since this trouble started? 

A. In round figures, I think. 

Q. On Exhibit 36 — and any time you want this 
let me know and I will hand it up to you 

A. Yes. 

Q. is an item " Bills due Oakland as of date, 

$533.65." There is a circle with a cross in it after 
that figure. Do you remember who put that in ? 

A. Yes. I put that in. 

Q. For what purpose? 

A. Those are bills that Mr. Brewer acknowl- 
edged that he owed Oakland. [322] 

Q. I mean this mark. 

A. That circled asterisk? 



vs. Cliarles P. Brewer, et al. 391 

(Testimony of Harold W. Hilts.) 

Q. Yes. 

A. We have the same thing down below. 

Q. What was the purpose of writing that in ? 

A. To tie it in to a number of invoices. 

Q. Didn't Mr. Brewer tell you at the time he 
had some question about that amount % 

A. No, not at all. He conceded it. 

Q. He conceded this amount entirely? 

A. Absolutely. He conceded the whole thing and 
made a payment on it. 

Q. Exhibit 39 is an exhibit showing an account 
as of July, 1947. You have "Monthly control serv- 
ice, $2,585.05." Is that the total amount of the 
charges for monthly service whether or not the col- 
lections had been made*? 

A. I don't know unless I can refer to the 
exhibit. 

(Exhibit No. 39 shown to the witness.) 

A. Now, your question again, please? 

Q. (By Mr. Bernard) : You have a total 
amount of business done, whatever the figure is, the 
first three items. What do they total up to? 

A. $2,645.55. 

Q. Is that the total amount of business done or 
the total amount of money collected? [323] 

A. That is the total amount of business on the 
books. 

Q. In arriving at the amount due Paramount 
Pest Control Service, you have taken 20 per cent 
of that amount'? A. No. 



392 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. Less one or two credits'? 

A. Less allowances that were written off the 
books during the month of July of $254.80. We 
claimed 20 per cent of the balance, $2,390.75, which 
is $478.15. 

Regardless of whether or not the money had 
been actually collected? 

A. That is correct. These are franchise routes. 

Q. I know they are franchise routes, but if you 
will answer the question, please. 

A. You bet I will. 

Q. Maybe you will remember this exhibit. Ex- 
hibit 51 is the list of the expenditures not verified, 
totaling $925.89. As I understand, you have charged 
those to Brewer in addition to the other drawings 
because you could not find any supporting vouch- 
ers, is that correct? A. Yes, sir. 

Q. You, yourself, of course, have no way to know 
whether or not that money was spent as legitimate 
expenses in connection with the business or whether 
he spent it on himself'? 

A, The only way we can determine, if there is 
expense in the record for it, is that he made out 
expense accounts for other [324] items he has paid 
and charged it to expenses. If there was no sup- 
porting evidence, the only thing we can do is come 
to that conclusion. 

Q. I didn't ask you that. I said you, yourself, 
have no personal knowledge as to where any of this 
money went, have you? A. No. 



vs. Charles P. Brewer, et al. 393 

(Testimony of Harold W. Hilts.) 

Q. Is that correct? A. No, it is not. 

Q. What? A. I don't know. 

Q. Now, I refer to Exhibit 53 in which you list 
the expenses of the business as $3,596.95. What is 
your salary with the company? 

A. I didn't understand. 

Q. What is your salary with the company? 

A. $5,200 a year. 

Q. On this exhibit you have "R. W. Hilts, Time, 
$350." Was that in addition to your salary or 
merely a proportion of the time with reference to 
the salary which is put in here? 

A. It represents the time that I put in here. 

Q. The company did not pay you any additional 
salary? The company did not pay you any addi- 
tional salary, did they, by reason of your coming up 
to Portland? 

A. Not in this particular case, no. [325] 

Q. Who is Andy LePape? 

A. One of our men. 

Q. What is his salary? 

A. I don't remember exactly. The computations 
are there. 

Q. It says $250 here. 

A. That is w T hat it is then. 

Q. That is his salary with the company, at that 
time ? A. Yes. 

Q. Was he paid any additional salary by reason 
of coming up to Portland? A. No, sir. 

Q. Carl Dolby. Who is Carl Dolby? 

A. One of our men. 



394 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. It says here $253.84. Was he paid any addi- 
tional money by reason of coming to Portland? 

A. No, sir. 

Q. W. T. Moore, $103.87. Who is W. T. Moore? 

A. One of onr men. 

Q. Was he paid any additional compensation by 
reason of coming to Portland ? A. No, sir. 

Q. DeGrey Brooks, $207.75. Was he paid a 
salary? A. Yes, sir. 

Q. Was he paid any additional salary by rea- 
son of coming to Portland? [326] 

A. No, sir. 

Q. C. W. Fisher. 

A. He was not with the company at the time. He 
went on the payroll immediately upon arriving. 

Q. How long had it been since he had been with 
the company prior to August 1st ? 

A. A matter of a few months. 

Q. How long did he work? A. A month. 

Q. A month? 

A. Yes, in and around the territory. He was not 
here in Portland a month. He was traveling around 
the country, — around the territory, rather. 

Q. Who is Mr. Elfers? 

A. Also one of our men. 

Q. You have got him down here for $220. Was 
he paid any additional salary by reason of coming 
to Portland? 

A. No, sir. We had to pay other expenses, 
though, to cover all of these men. 



vs. Charles P. Brewer, et al. 395 

(Testimony of Harold W. Hilts.) 

Q. Exhibit 54 in an exhibit which is headed 
" Canceled accounts with time to run as per con- 
tract," 

What did you do in making up this exhibit, put 
in all the contracts that had been canceled since 
August 1st ? 

A. Only those contracts that were canceled be- 
cause of Brewer's action. [327] 

Q. How did you determine they were canceled 
because of Mr. Brewer's action? 

A. There is an exhibit attached to that, the 
contract itself, plus, I believe, supporting detail as 
to the customers and, in some cases, the reasons, 
where they were contacted personally by the men 
and they brought that information back with them 
in submitting the canceled accounts by the medium 
of the cancellation slip which is attached, I believe, 
for both of these exhibits. 

Q. How did you determine, in making up this 
exhibit, that Mr. Brewer was responsible for can- 
celing any particular contract? 

A. Any accounts that were canceled at the time, 
right after the beginning of August 1st, 1947, were 
put aside specifically for that purpose, and we sched- 
uled them and we knew what they were. 

Q. Under this heading "List of accounts that 
were on books longer than a year and canceled only 
because of Brewer action," on Exhibit 55, that, as 
we understand it, is the total amount that the cus- 
tomers would have been called upon to pay if the 
contracts had run their time, is that correct ? 

A. That is correct. 



396 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

Q. And then you said you figured you were en- 
titled to 40 per cent of that? 

A. That is correct. [328] 

Q. If all that money had been collected by Mr. 
Brewer after July 1st and the work done by him, 
how much would Paramount Pest Control Service 
have received on it ? 

A, If it had been collected by Mr. Brewer? 

Q. No. You have here that there would have 
been collected, if the contracts had run their course, 
$4*596.75. If Mr. Brewer had succeeded in per- 
forming these contracts under his license, how T much 
would Paramount Pest Control Service have re- 
ceived ? 

A. We would have received, under the agree- 
ment, 20 per cent should the agreement cease to 
exist Therefore, we would have received 40 per 
cent. 

Q. In other words, you are claiming twice as 
much as you would have received if he had gone 
on under his license 1 ? 
■ A. That is correct, but he did not go on. 

Q. As I understand it, you also said you figured 
you were entitled to $1,500 a month damages. That 
would be $18,000 a year. How do you figure that? 

A. I didn 't say that. 

Q. Tell me what you did say. 

A. I said we figured our damages amounted to 
$1,500.00 a month, and that we could retain under 
the terms of the contract, on an experience rating, 



vs. Charles P. Brewer, et al. 397 

(Testimony of Harold W. Hilts.) 
60 per cent of all customers that are on our records 
and, therefore, our damage is about 60 per cent over 
the term expiration of the contract. 

Q. 60 per cent of what? [329] 

A. 60 per cent of $1,500 per month for nine 
years, for eight years and eleven months. 

Mr. Bernard: I think that is all. 

Redirect Examination 
By Mr. Rankin: • : 

Q. Counsel asked you about $1,500 that you re- 
ceived as payment on the contracts after August 
1st? A. Yes, sir. 

Q. Did you have to service those contracts? 

A. Yes, -sir. 

Q. Exhibit 54 contains a list of contracts can- 
celed. Counsel asked you why you attributed those 
to Brewer. State whether or not you compared those 
canceled contracts with the answer that Mr. Brewer 
filed iri regard to the interrogatories? 

A. Yes, sir, T did. 

Q. And did Mr. Brewer confirm those cancel- 
lations by saying that he had taken over the con- 
tracts? A. Yes, sir. 

Q. Counsel also inquired oi you whether or' not 
these men were paid a regular salary or were paid 
anything additional. Would any of those men have 
been doing the work of saving the company's 
business in Oregon had Mr. Brewer not left the 
company and canceled the contracts and then con- 
tinued his service? 



398 Paramount Pest Control Service 

(Testimony of Harold W. Hilts.) 

A. No, sir. We would have received revenue 
from their operations elsewhere in our organization. 

Q Did you give Mr. Brewer an opportunity to 
explain the vouchers in that item of the exhibit 
that has to do with the unsupported charges or 
withdrawals'? A. No, not at that time. 

Mr. Rankin : All right. Thank you. 

Recross-Examination 
By Mr. Bernard : 

Q. Maybe in one of my questions I did not make 
myself clear. When Mr. Brewer left on August 1, 
1947, there were some amounts owing for work 
which had already been done by him ? I mean, on the 
books'? A. Yes, sir. 

Q. How much of that has been collected by 
Brewer's Pest Control ? 

A. By Brewer's Pest Control'? 

Q. By the Paramount Pest Control Service, 
yourselves'? A. Around $1,500. 

Mr. Bernard: That is all. 

Redirect Examination 
By Mr. Rankin : 

Q. Did you service the contracts from which 
you received that money*? 

A. We serviced them afterwards, but not be- 
fore. 

Mr. Rankin: All right; that is all. 

(Witness excused.) [331] 



vs. Charles P. Brewer, et al. 399 

GLENN H. FISHER 
was thereupon produced as a witness on behalf of 
plaintiff and, being first duly sworn, was examined 
and testified as follows: 

Mr. Rankin: If the Court please, at the time I 
offered this one deposition of Mr. Flanagan, I an- 
ticipated using others along the same line, or I 
would not have offered the one little deposition. To 
expedite this case, I think we can dispense with 
these others, so I place no particular stress upon 
that one little deposition. 

Direct Examination 
By Mr. Rankin: 

Q. You are a little hard of hearing, aren't you, 
Mr. Fisher? A. Slightly. 

Q. Give your name to the Court. 

A. Glenn Harold Fisher. 

Q. Where do you live? 

A. 6600 Dawes Street, Oakland, California. 

Q. About how long have you lived there? 

A. About two and one-half years. 

Q. What is your occupation? 

A. Pest control. 

Q. How long have you been in the pest control 
business? A. Since 1935. 

Q. Are you the Glenn Fisher mentioned as one 
of the partners in the original Paramount Pest 
Control Service with Mr. Sibert? [332] 

A. I am, sir. 



400 Paramount Pest Control Service 

(Testimony of Glenn H. Fisher.) 

Q. When did you first meet Mr. Brewer? 

A. In the early part — I would say in the first 
week of January, 1946. 

Q. What was the occasion of your meeting him? 

A. He was in Mr. Sibert's office, talking to him, 
I think at that time, in regards to being employed 
by us. 

Q. Do you segregate any departments in your 
corporation for any one individual to supervise? 

A. Yes, we do. 

Q. Have you a particular department that you 
give your attention to ? 

A. Yes. My real function in the organization is 
contacting our personnel, our managers, throughout 
the territory. 

Q. Did you have anything to do with Mr. 
Brewer in that regard? A. No, I didn't. 

Q. Did you have, at any later date, any occasion 
to confer or discuss any phases of the business with 
Mr. Brewer? 

A. What do you mean by a later date? 

Q. After this January meeting when you first 
met him for the first time ? 

A. Yes. In February, I think it was the fore- 
part of February, that same year. 

Q. What was the occasion and what did you do? 

A. I was having a conversation or conference 
with Mr. Sibert [333] and we had decided some- 
thing would have to be done with the Portland ter- 
ritory, and we discussed at great length the possi- 



vs. Charles P. Brewer, et al. 401 

(Testimony of Glenn H. Fisher.) 
bilities and what we should do about it, and about 
that time we decided that Mr. Brewer, whom I had 
met about a month previous, would be the man. We 
were preparing to call him and we got a buzz from 
the front office that he was out in the front office 
w T aiting. It was entirely a coincidence. 

Q. Did you discuss the matter with him? 

A. I did. 

Q. Just tell what transpired. 

A. We called him back and talked to him about 
the territory, and he had previously expressed his 
desire, if he came to work for us, to come to this 
general territory, and he wanted to know something 
of these agreements that we had with our employ- 
ees, so we told him there were two, a managership 
agreement and also a franchise agreement, and, in 
order to better explain them to him, I got a copy of 
each from our files and we sat down right across 
the table and we took those paragraphs more or less 
paragraph by paragraph and, if he had questions 
to ask, I tried my best to explain it to him. 

Q. When was this, please? 

A. This was in February, the forepart of Feb- 
ruary. 

Q. What year? A. 1946. 

Q. Did you at that time explain to him the fran- 
chise agreement, [334] a franchise agreement in the 
same form as that which he signed on July 1st with 
you? 



402 Paramount Pest Control Service 

(Testimony of Glenn H. Fisher.) 

A. Yes. With the exception of the name of the 
agent, the territory and date, I would say they were 
verbatim. 

Q. Did he come up immediately on that fran- 
chise? A. No, he didn't. 

Q. What did he come on? 

A. Well, he came on our promise of a manager- 
ship agreement. 

Q. Did he sign a managership agreement? 

A. Not at that time. 

Q. Did he later sign one? A. Yes, he did. 

Q. When ? 

A. In Portland, Oregon, after I came up some 
two or three days later. 

Q. At the time he came to Portland, had you 
gone over both contracts with him? 

A. Definitely. 

Q. Did he take them to any lawyer or any place 
that you know of? 

A. No, I don't know as he did. I oftentimes 
suggest that they might, but I don't know as I did 
this time. Possibly could have. 

Q. Did he take that away with him? 

A. Yes. [335] 

Q. Take them away, I should say. 

A. Yes. 

Q. What did he do with them, if you know? 

A. He took them home. I told him, "Take these 
home and study them. There may be something else 
come up, because this is a very important business 



vs. Charles P. Brewer, et al. 403 

(Testimony of Glenn H. Fisher.) 
for us and we feel it should be an important venture 
for you, and it is very essential that we have a per- 
fect understanding." 

Q. When he returned them, did he make any 
further inquiry about them? 

A. No, I don't believe he did. 

Q. Did he ask you anything about them then? 

A. No, he never asked me. 

Q. Where did he sign the manager's contract 
that you mentioned? 

A. In Portland, Oregon, after I came up. 

Q. About what time? 

A. That would be about March 4th or 5th, right 
shortly after the first of March. 

Q. How did you handle the execution of this 
franchise, July 1, 1946? 

A. I beg your pardon? 

Q. It bears your signature and Mr. Brewer's 
signature. Would you tell the Court how that was 
handled in its execution? 

A. Well, I had talked to Mr. Brewer at the time 
of his coming [336] north. He didn't wish to come 
north without a -contract and he wanted a franchise 
contract, but I explained to him that possibly for a 
month or two or three he w r ould be better off from a 
financial standpoint to go on a managership agree- 
ment, and he said he could get along on $250 a 
month, and that was the agreement he went on, and 
if the business prospered and was handled correctly 
he would naturally, under that agreement, be able 



404 Paramount Pest Control Service 

(Testimony of Glenn H. Fisher.) 
to earn more than $250 a month, so I had more or 
less set the 1st of July, which was about three 
months from then, as a good time for him to go 
under our regular franchise agreement, due to the 
fact that we were in the process of incorporating 
our business, making us a corporation rather than 
a partnership, and at that time we could go into our 
regular franchise agreement with him as a corpora- 
tion, and it was very agreeable to him. 

Q. Where did you sign that franchise of July 
1st, 1946? A. In our Oakland office. 

Q. Had Mr. Sibert signed it then? 

A. No, he hadn't. 

Q. I don't mean Mr. Sibert. I mean Mr. Brewer. 
Had Mr. Brewer signed it then? 

A. No, he hadn't. 

Q. What did you do about getting his signature? 

A. I sent him two copies in the mial — I signed 
two copies and put them in the mail and sent them 
to Oregon to Mr. Brewer [337] in Oregon for his 
signature. 

Q. When did you do that? 

A. That would be in July, the forepart of July 
or, rather, possibly the latter part of June, some- 
where along in there. 

Q. How long was it before you got them back? 

A. Oh, I would say a week, approximately the 
time that it would take the mail to come up and be 
returned. 

Q. Did you got them both back or one? 

A. One, my copy. 



vs. Charles P. Brewer, et al. 405 

(Testimony of Glenn H. Fisher.) 

Q. When you received it back, was Mr. Brew- 
er's signature on it? A. Yes, it was. 

Q. When did you again see Mr. Brewer? 

A. From what date, sir? 

Q. Any time after July 1, 1946, any time after 
July 1st? 

A. July 1st, 1946. I was just trying to think, 
Mr. Rankin. 

Q. Let me get at it this way: When did you 
again come to Portland, Oregon, after July 1st, 
1946? 

A. I believe it was in August I came through 
here on my vacation and just merely stopped off as 
I was going through. 

Q. When did you again come on any business 
trip? 

A. Never came on another business trip until 
after the breach of this agreement. 

Q. Did you see Mr. Brewer in Oakland in Nov- 
ember, 1946? A. Yes, sir. [338] 

Q. Where did you see him? 

A. In Mr. Sibert's home. 

Q. Mr. Brewer claims he came there with his 
wife in protest against your treatment of him in 
the Oregon territory. Did you have any conversa- 
tion with him about the business in Oregon? 

A. Not other than "How are things going ?" 
And he seemed to be very well satisfied. He had 
an expression which he used at that time. He said, 
lit is the best in the West," That is the way he 
was explaining to me how he felt things were going 
in Oregon. 



406 Paramount Pest Control Service 

(Testimony of Glenn H. Fisher.) 

Q. I believe the testimony shows that you were 
here in June, 1947. No, I beg your pardon. I believe 
the evidence shows that were again in Mr. Sibert's 
home in June, 1947 ? A. That is true. 

Q. Did you see Brewer then ? 

A. Yes, I saw Mr. Brewer at that time. 

Q. Did you discuss the Oregon business with 
him then"? 

A. Well, it was almost identical. I travel a 
great deal and, as I remember, on that trip I was 
just returning from Los Angeles. I heard Mr. 
Brewer was in town so I dropped in to visit a while 
on my way home. 

Q. From the time you met Mr. Brewer until 
this June meeting in 1947 in Mr. Sibert's home, 
had he ever told you or anyone connected with the 
company in your hearing that he was going [339] 
to drop this business, this franchise? 

A. No, sir. When that happened, we were all 
very much dumbfounded. We could hardly 
believe it. 

Q. Was there anything in any of his conduct at 
any time that gave you any warning that he was 
terminating his agreement? 

A. Not in my presence, no, sir. 

Mr. Rankin: You may cross-examine. 

Cross-Examination 
By Mr. Bernard: 

Q. At the start of your examination you said 
it had been decided something had to be done with 
the Portland office. Is that correct? A. Yes. 



vs. Charles P. Brewer, et al. 407 

(Testimony of Glenn H. Fisher.) 

Q. Whom did you discuss that matter with? 

A. Mr. Sibert, Mr. Hilts, I believe, and— At 
least Mr. Sibert and myself. 

Q. What was the reason that something had to 
be done with the Portland office? 

A. Well, it just so happens that the former 
employee is in the courtroom today, so I will he 
speak very frankly. We felt that the business was 
not being taken of adequately; there were com- 
plaints, particularly from our largest customer, the 
Southern Pacific Company, and when I came up 
here this former employee said, "Mr. Fisher, I 
don't blame you. I expected it several months ago." 

Q. In other words, conditions in the Portland 
office were not satisfactory? 

A. As far as service was concerned. 

Q. When you saw Mr. Brewer, you discussed 
both forms of contracts with him? 

A. That is true. 

Q. The manager's contract and the franchise 
form of contract? A. That is true. 

Q. Was it in California that you claim to have 
turned over copies of them to him? 

A. That is right. It was in Oakland. 

Q. You say that he took those away from the 
office? A. That is true. 

Q. How long did you say he had them? 

A. I would say two or three days. It seems to 
me — I wouldn't be positive, but it seems to me like 
this was along the latter part of the week and he 



408 Paramount Pest Control Service 

(Testimony of Glenn H. Fisher.) 
was to come to work Monday morning. I believe 
he took them home with him over the week end and 
familiarized himself with them. 

Q. That was before he had done any work in 
pest control ? A. That is true. 

Q. You knew that he was totally ignorant of 
the pest control business? 

A. That is right, other than what conversations 
we had had prior to giving him the contract and 
talking contract, as we [341] always do to a man 
that has no understanding of any of this business; 
we would explain the thing, the nature and type 
of our work, and tell him about the dirty part of 
it as well as the good part of it, so he can make 
up his mind as to whether he considers himself the 
type of a person that would adapt himself to this 
business. 

Q. Did he want to sign a contract before leav- 
ing Oakland? A. For Portland? 

Q. Yes. 

A. He desired to sign a contract. He didn't — 
He said he didn't want to go anywhere without hav- 
ing a contract and at that time he wanted the 
franchise contract. 

Q. Why didn't you have him sign a contract 
before he left Oakland? 

A. Because at that time our former manager 
had not been notified of our decision to replace him, 
and I felt that that would be getting the cart before 
the horse to have one man have a contract in a 
district where another man already had a contract. 



vs. Charles P. Brewer, et al. 409 

(Testimony of Glenn H. Fisher.) 

Q. So he came up here with no written contract 
at all? 

A. That is true, but with the promise of one. 

Q. After he got here he signed what was known 
as the manager's contract? A. That is true. 

Q. What compensation was he to get under that 
manager's contract? [342] 

A. Under the manager's contract he received 
$250 a month guarantee with 20 per cent of the net 
profit, over $600, monthly base. 

Q. Over $600 monthly, net monthly base? 

A. That is right. He got $250 out of the first 
$600, and run the business, paid the expenses on 
the first $600 of business. If there is anything left 
out of the first $600, he got it. Further than that, 
he got 20 per cent of the net profits. 

Q. Was this $250 paid out of that $600? 

A. That is correct. That was included. 

Q. So, under that form of contract, he would 
get $250 a month guarantee or $3,000 a year and 
then anything over $600 net profit? 

A. No, sir. 

Q. What? A. No, sir, I didn't say that. 

Q. All right. You tell me. 

A. He got his 20 per cent of the profit, net 
profit, of all business done over $600. 

Q. How long did this manager's contract have 
to run by its terms ? 

A. By its terms it could be canceled within 
thirty days by either party. 



410 Paramount Pest Control Service 

(Testimony of Glenn H. Fisher.) 

Q. Subject to a 30-day cancellation'? [343] 

A. That is true. He was put on that basis just 
for the first two or three months, according to my 
more or less understanding with him. 

Q. What do you mean your "more or less under- 
standing with him"? 

A. All right. He asked me about the franchise 
when he came up here, and that is when I told him 
that he should not go on the franchise; that he 
would make more money and would be better off to 
go on a managership franchise or a managership 
agreement, and I felt that if he would go in and 
do his work and finish all the work which was laid 
out here that he would then be in a very fine posi- 
tion to go on the franchise agreement on July 1st. 

Q. Where did you discuss the matter with 
him after he came to Portland? 

A. You mean on the first trip here? 

Q. Yes. 

A. In the hotel room, I believe it was, or at Mr. 
Taylor's home where our office was at that time. 
I would not be sure. 

Q. I mean with reference to this franchise 
contract. 

A. I didn't discuss it at that time. We had made 
our discussion on that score before he left Oakland. 
I merely had the contract with me and he seemed 
to be very familiar with it. He didn't hesitate to 
sign it. He said, " Where is your j)enV' 

Q. Did you bring it to Portland? [344] 

A. T brought the contract to Portland with me. 



vs. Charles P. Brewer, et al. 411 

(Testimony of Glenn H. Fisher.) 

Q. For his signature? 

A. For his signature. 

Q. For what other reason did you come to 
Portland? 

A. To terminate our agreement with Mr. Taylor, 
our former manager. 

Q. When did you terminate your agreement 
with Mr. Taylor? 

A. Let's see. I imagine — I think it was the 4th 
or 5th of April, the first week of April. 

Q. That is when you had Mr. Brewer sign the 
manager's agreement? A. That is true. 

Q. What did you do towards having it changed 
over to a franchise agreement as of July 1st? 

A. I had nothing to do with it other than our 
discussion with Mr. Sibert in that regard in our 
Oakland office. 

Q. Mr. Sibert was the man who told you to 
prepare the franchise agreement? 

A. No, he didn't tell me to prepare that agree- 
ment at all. 

Q. You had nothing to do with Mr. Brewer 
signing that franchise agreement? 

A. No, sir, other than sending it up there after 
the boundary or territory part of it had been 
filled in. 

Q. When you sent it up, was it signed? 

A. When I sent the two copies to Mr. Brewer? 

Q. Yes. 

A. Yes, I signed the two of them. 



412 Paramount Pest Control Service 

(Testimony of Glenn H. Fisher.) 

Q. You signed the two of them and sent them 
up? A. Yes. 

Q. You were not, of course, present when he 
signed it? A. No. 

Q. Who delivered it to Mr. Brewer for sig- 
nature? A. I mailed it to him. 

Q. For signature? A. That is true. 

Q. Do you know if anybody discussed it with 
him prior to July 1st? 

A. Prior to July 1st? Yes, I think Mr. Sibeit 
had. I don't know. He probably did. 

Q. Isn't it a fact Mr. Sibert made the contract 
up in Portland here? 

A. With the exception of the boundaries, and 
for that reason Mr. Sibert would not sign a con- 
tract here without first consulting me on the boun- 
dary situation. Mr. Brewer, as I recall the conver- 
sation with Mr. Sibert, had requested a portion of 
the State of Washington to be included into the 
franchise because of the proximity, particularly of 
Vancouver across the river, and we would not write 
that in the franchise. Mr. Brewer, if I am not 
mistaken, was left a copy of this exact franchise as 
it was typed here under Mr. Sibert 's orders, and 
two of them [346] were brought to Oakland, that is, 
the two that were used to fill in the boundary, to 
have the boundaries of the territory put in, and 
that was typed in Oakland and I signed them, 
inasmuch as I had more or less promised or inti- 
mated to Mr. Brewer that his franchise would start 
July 1st, and mailed them to him. 



vs. Charles P. Brewer, et al. 413 

(Testimony of Glenn EL Fisher.) 
Q. When was this concern incorporated? 
A. July 1st, 1946. 
Mr. Bernard : That is all. 
Mr. Rankin: That is all. 

(Witness excused.) 

Mr. Rankin: That is our case in chief, if your 
Honor please. 
Plaintiff rests. 

STIPULATION 

Mr. Bernard: If your Honor please, before I 
proceed with the testimony, Mr. Smith has kindly 
agreed to stipulate with me that the original com- 
plaint filed in the Circuit Court of the State- of 
Oregon for the County of Multnomah, Paramount 
Pest Control Service, a corporation, vs. Charles P. 
Brewer, Raymond Rightmire, Carl Duncan, Earl 
Merriott and Rosalie Brewer, which, as we hkve 
said, involves the same matters involved here and 
which was verified by Mr. T. C. Sibert, contains 
the following allegations with reference to this 
franchise contract : 

"That notwithstanding the written provision 27 
of said agreement, the parties did not, and do not 
intend that the laws of the State of California shall 
govern any or all questions that may arise concern- 
ing the validity, construction or interpretation of 
this agreement, nor did they intend that any civil 
action which might be filed had to be filed in' the 
State of California." 

Mr. Smith: That is correct, your Honor. 



414 Paramount Pest Control Service 

Defendants ' Testimony 

RAYMOND RIGHTMIRE 

one of the defendants herein, being first duly sworn, 
was examined and testified as follows : 

Direct Examination 
By Mr. Bernard: 

Q. Mr. Rightmire, where do you live? 

A. In Portland, Oregon. 

Q. How long have you lived here? 

A. Since August, 1946. 

Q. Where did you live prior to coming here in 
August, 1946? 

A. I lived in Vancouver, Washington, two years. 

Q. When did you first go into the pest control 
business? A. It was in May, 1946. 

Q. May, 1946? A. Yes. [348] 

Q. And where was that? 

A. It was in Portland, for the Paramount Pest 
Control Service. 

Q. Was it at that time that you signed this 
statement about not — Wait until I find it — this 
statement appearing on page 8 of the complaint 
starting out " Because I do have a limited knowl- 
edge of the exterminating, pest control, or termite 
business, and do not know any formulas, processes, 
methods, or other trade secrets thereof, I agree/ ' 
and so forth? Was it at that time that you signed 
that statement ? A. Yes, near that time. 

Q. About in May? A. Yes. 



vs. Charles P. Brewer, et al. 415 

(Testimony of Raymond Rightmire.) 

Q. Did you at that time have any knowledge of 
the exterminating business or pest control business ¥ 

A. Very little. 

Q. Who hired you? 

A. Mr. Sibert of the Paramount Pest Control 
Service and Mr. Brewer. 

Q. After you were hired, what did you do*? 

A. Oh, I immediately began traveling around 
with Mr, Duncan for about three days. 

Q. What information did Mr. Duncan give youi 

A. Well, he showed me how to cut up carrots 
and apples and things like that and put them in a 
one-gallon can and stir it up and put a little chem- 
ical on it or poison, and we ran [349] around these 
buildings, around the baseboards, and dropped little 
pieces here and there; and he showed me a little 
bit about roaches, how to exterminate them, or 
about how it was done. 

Q. What did he show you about exterminating 
roaches % 

A. He had a little bit of a puffer that laid in 
the palm of his hand, with a little powder in it, and 
he went around the cracks where roaches might be, 
showed me where they might be in there — that was 
the principal thing that Mr. Duncan showed me. 

Q. You say you worked with him for about three 
days % A. That is right. 

Q. At any time were any formulas, processes 
or methods or trade secrets given to you ? 

A. No, not that I know of. 



416 Paramount Pest Control Service 

(Testimony of Raymond Rightmire.) 

Q. After these days what did you do, Mr. 
Rightmire? A. I went to work by myself: 

Q. Did you continue to work by yourself from 
that time on? A. Yes. 

Q. Just tell the Court how you would work. In 
other words, would you be given the names of per- 
sons to go and call on, or what? 

A. There was a list of customers around there 
in the office in the Kardex form, and principally 
those at first was trouble calls, continuous trouble 
calls. The phone was ringing whenever [350] I was 
in the office, and when I was out I called in to the 
office and it was always troubles. Two-thirds of my 
time, after the first days, were spent on troubles. 

Q. Then, after that period, how did you work? 

A. Well, after that period of time, the salesman 
that was with the organization at that time was 
contacting people, and I was working behind him. 
I did have to learn about exterminating these pests 
myself. Something that no one seemed to be able 
to show me in the Paramount organization was how 
to exterminate them. They were servicing these 
customers, and they didn't show me how 7 to get 
rid of them. 

Q. You say you learned that yourself I 

A. Yes. 

Q. How long did you continue to work for them, 
Mr, Rightmire? 

A. Beginning or near the first of July I was 
told by Mr. Hilts and I was told by Mr. Brewer 



vs. Charles P. Brewer, et al. 417 

(Testimony of Raymond Rightmire.) 
that I was no longer at that time working for Para- 
mount Pest Control Service, a partnership; that 
I was working for Charles P. Brewer, and I felt, 
due to the fact of this little slip that I signed, that 
I was no longer obligated to them, since I was not 
working for them, for that partnership. 

Q. Mr. Hilts told you that? 

A. Mr. Hilts and Mr. Brewer. 

Q. After July 1st, how did you continue?- 

A. Well, we were continually making an effort 
and endeavoring [351] to exterminate pests in order 
to hold these accounts, and we did settle this- can- 
cellation business within three months or four. I 
recall in that time very long hours of hard work 
and uncertainty, because I didn't know all about. it. 

It was during that time, it seems to me, about 
three months after that Mr. Sibert came — I believe 
he flew up here — and as I came to work that morn- 
ing Mr. Brewer drove up with his car, with Mr. 
Sibert in the car, as I was walking up Park Avenue 
to our office. 

Mr. Sibert stepped out of his car in the presence 
of Mr. Brewer and myself and he said, "Ray, you 
fellows have done a wonderful job here," and he 
said, "You have brought this thing out of the red 
for the first time, the first time that the Portland 
territory was ever out of the red." 

I thanked him and told him that I thought we 
had done all right, due to the fact that our knowl- 
edge was limited and that our education had been 



4.18 Paramount Pest Control Service 

(Testimony of Raymond Rightmire.) 
slightly neglected along those lines, and he turned 
to Mr. brewer and said, " Charlie, remind me to 
send this boy a course in chemistry right away," 
but I never got that course in chemistry. 

Q. Can you figure about what month that was, 
Mr. Rightmire? 

A. It must have been in July, June or July. 
Dates didn't mean much to me. I don't keep a 
diary. 

Q. Did you go on vacation in July? 

A. That was in 1946, that other statement. Yes, 
I did. [352] 

Q. How long did you continue that work, 
through 1946 and 1947? 

A. I am going to make a correction here. 

Q. Yes. 

A. I didn't go on vacation in July, 1946. 

Q. What work did you continue to do through- 
out 1946, say, for the first half of 1946? 

A. It was mostly in extermination of rats, mice 
and roaches. There was an occasional ant job. I 
think during my employment by Paramount that 
there was not over eight or ten jobs of ant control 
or ant extermination. 

Q. How would you do those jobs? 

A. Well, we had some ant cups, they call them, 
and we put those around, but they didn't do any 
good. In fact, it looked to me as if the ants was 
getting fat on them, so we tried other things, and 
eventually that roach powder and everything else 



vs. Charles P. Brewer, et al. 419 

(Testimony of Raymond Rightmire.) 

that satisfied the customer, but to this date I am not 

a good ant exterminator. 

Q. Did you go on vacation in July, 1947? 

A. Yes. 

Q. When did you go? 

A. Went to Camp Sherman. 

Q. When? 

A. It was the very last part of July. 

Q. You went to Camp Sherman? [353] 

A. Yes. 

Q. How long were you down there ? 

A. I think we were up there three or f out 
months. 

Q. Prior to your leaving, Mr. Rightmire, did 
you know that Mr. Brewer had severed or intended 
to sever his connection with Paramount Pest Con- 
trol Service? A. I did not. 

Q. When did you first receive any information 
that Mr. Brewer had severed or intended to sever 
his connection with Paramount Pest Control 
Service? 

A. When I asked Mr. Brewer for this vacation, 
which was much overdue, he told me he would let 
me have the vacation, that he thought it was earned, 
that I was entitled to it, and then he didn't know 
at that time whether he would still be manager of 
Paramount when I returned. 

Q. Did he make any further statement about 
that? A. Not that I remember of. : : : .• 

Q. You returned when? 

A. Three or four days later: the exact dates I 
don't recall. 



420 Paramount Pest Control Service 

(Testimony of Raymond Rightmire.) 

Q. Do you remember being over at Mr. and Mrs. 
Brewer's house about July 30th when Wendy 
Fisher came over there ? 

A. I went over there and returned Mr. Brewer's 
fishing equipment. I had borrowed it to go fishing 
on my vacation. I was visiting with Mrs. Brewer, 
as Mr. Fisher said. 

Q. Had you been informed then Mr. Brewer was 
severing his [354] connection with the company? 

A. I had not been completely informed then. 

Q. You had not been completely informed? 
What information did you have? 

A. I knew by his statement before I went that he 
w^ts going to break with them, but I hadn't got to 
talk to Charlie myself right at that time. 

Q. That was about the time you went on your 
vacation? 
, A. About the time I went on my vacation, yes. 

Q. What was the conversation, as you recall it, 
bver in the Brewer home on July 30th when you re- 
turned this fishing equipment to Mr. Brewer here? 

A. Mr. Fisher was in there. I and Mrs. Brewer 
was visiting there, and he came in and, I don't 
know — we were all in a very jolly mood. I was 
happy over having a vacation. I didn't make any 
statement ; neither was there a statement made there 
concerning the fact that I had my vacation pay and 
if I hadn't got it I never would have got it, That 
statement was never made, nor there was no state- 
ment made there of that kind that I recall at all. 



vs. Charles P. Brewer, et al. 421 

(Testimony of Raymond Rightmire.) 

Q. "What is your recollection of the conversation 
with Mr. Fisher 1 ? 

A. I don't remember much of it. It was very 
short. I returned Charlie's equipment. I really 
don't recall right off. 

Q. When did you receive any definite informa- 
tion that Mr. Brewer had resigned or had severed 
his connection, we will say, with [355] Paramount 
Pest Control Service ? ; : 

A. After we left the house — I left the house and 
Mr. Brewer followed me to his car and told me that 
he was done with Paramount. • »: 

Q. That was on July 30th? . / ; : . 

A. I think so, yes. .. 

Q. Did you see Mr. Hilts within a dayor't^o 
of that time? 

A. Yes, Mr. Hilts called at my home. > 

Q. Do you remember what date? : 

A. I think it was the 31st. I am not sure of that. 

Q. What was the conversation between you : and 
Mr. Hilts at that time? 

A. Mr. Hilts came to my home. It was a nice 
day and we sat out on the steps. He told me he: re- 
gretted that I had been sick and called mainly for 
that purpose, that I had been sick and he was there 
to console me. •: . ; ! 

I remember very distinctly that I told Mr./ Hilts 
right there that I would not believe, under any Con- 
sideration, anything that Mr. Sibert would have to 
say to me, although I assure you there was ho; pro- 
fanity used in our conversation. 



422 Pa fit Pest 

Q. W 

A. Well, that inn 
:' Mr. Merriott. 
Q. What was thai ! 

A. Mr. I an employee. 

Q. What v. 3 said about Mr. M ttl [356] 

A. He asked me if Air. ! 2 1 ex- 

terminator. I to i he was exterminator. 

He sail "Wp might want to use him for a while." 

Q. Anything further said that you recall? 

A. He soon drifted to the subject of personal 
affairs and we sat down and visited cordially of 
what we had done in the past. 

Q. When did yon go to work for Brewer's Pest 
Control* 

A. Shortly after the 1st of August, 1947. 

Q. Tell the Court how you happened to go to 
work for Brew ir'a Pesl I troll Who approached 
youl A. Mr. Brewer approached me on that. 

Q. What did he have 

A. He asked me if I would <• work for him 

in the pest control business. Knowing Mr. Brewer, 
knowing he had dealt fair with me and everybody 
else that T ever saw him deal with, knowing he was 
honest and I I given me a fair deal, and not then 
having a job or any way to make a living for my 
family, I accepted the offer. 

Q. By the way, how do you mean work? What 
t of an arrangement did you have as to compen- 
ionl A. Hp pays ich week. 



vs. Charles P. Breiver, et al. 423 

(Testimony of Raymond Rightmire.) 

Q. Is that the way you were paid prior to the 
organization of Brewer's Pest Control? 

A. Yes, we were paid weekly. 

Q. You were getting a weekly wage? [357] 

A. That is right. 

Q. Mr. Rightmire, did you have any under- 
standing, directly or indirectly, with Mr. Brewer, 
or with any other person, that you would quit the 
Paramount Pest Control Service and attempt to 
take over their business ? A. No. 

Q. Was that matter discussed between you and 
Mr. Brewer at all? 

A. It was not discussed at all. 

Q. But did you discuss it with any other person? 

A. No other person. 

Q. Is your only interest in this thing as a wage 
earner ? 

A. That is right. I am just a working man. 

Q. What kind of work have you done for 
Brewer's Pest Control? 

A. Exterminating work. 

Q. Did you have any list of the customers of 
Paramount Pest Control Service? 

A. I did not. 

Q. Have you done work for persons who were 
former customers of theirs? A. Yes, sir. 

Q. Have you secured other accounts as well ? 

A. Yes, sir. 

Q. What part of the state do you work in? 

A. Well, I was — I did work for Mr. Brewer in 
the Eastern [358] Oregon territory last but since 



424 Paramount Pest Control Service 

(Testimony of Raymond Rightmire.) 

the 1st of November, I believe, I nave worked more 

in the west and southern parts of the state. 

Q. Have you done work for Brewer's Pest Con- 
trol for the Sugar Bowl in The Dalles? 

A. Not for Brewer's Pest Control, no. 

Q. Or for the Peasley Transfer or Transporta- 
tion Company in Boise, Idaho? 

A. I have not. 

Q. Or for The Dalles Hotel? 

A. I have not for The Dalles Hotel. Explanation 
there — The Dalles Coffee Shop which has an owner 
by itself, I worked for them. 

Q. You have worked for the coffee shop in The 
Dalles Hotel 1 A. Yes. 

Q. There is some evidence here that somebody 
told somebody else that somebody representing 
Brewer's Pest Control had told them that Para- 
mount was dissolving, that Brewer was really a 
change of name from the Paramount Pest Control 
Service. Did you ever make any statement anywhere 
like that to anybody connected with The Dalles 
Hotel or The Dalles Coffee Shop? 

A. Absolutely not. 

O. Did you make any statement of that kind to 
any person at any time? A. No. 

Q. Have you at any time in your work for 
Brewer's Pest Control [359] made any statement at 
all regarding the Paramount Pest Control Service? 
V I have not. 



vs. Charles P. Brewer, et at. 425 

(Testimony of Raymond Rightmire.) 

Q. Are you now in possession of any formulas, 
trade secrets or processes of any kind furnished to 
you by Paramount Pest Control Service ? 

A. No, I have none in my possession at all. 

Q. Did they ever furnish you with any? 

A. No. 

Mr. Bernard: You may cross-examine. 

Cross-Examination 
By Mr. Rankin : 

Q. Mr. Rightmire, you said the matter of your 
instruction when you first went to work for Para- 
mount Pest Control Service was very meager? 

A. Very simple, yes. 

Q. In other words, it was very poor instruction? 

A. No, sir; it was just of very short duration. 

Q. What was the character of that instruction 
that you did receive? 

A. As far as the instruction I had, it was good. 

Q. . When did you go to work for them? 

A. In May, 1946. 

Q. As I gathered the import of your testimony a 
moment ago it was that you had not had very much 
instruction, that they [360] just showed you a few 
places where you might put down something that 
some pest or rodent might eat? 

A. Yes, that was in the instructions. 

Q. Will you tell the Court whether the instruc- 
tion you received when you began in May, 1946, was 
good or bad? 

A. What instruction I had was good. 



426 Paramount Pest Control Service 

(Testimony of Raymond Rightmire.) 

Q. Who was in charge at that time*? 

A. The instructor, you mean? 

Q. Yes. A. Mr. Duncan. 

0. Mr. Duncan'? A. Yes. 

Q. And he is now associated with you in the 
Brewer's Pest Control, is he not? 

A. He is an employee of Mr. Brewer. 

Q. You are associated with him in that same 
business, are you not? 

A. I am an employee of Mr. Brewer. 

Q. Will you answer the question? 

(Question read.) 

A. Yes. 

Q. You w r ere also a defendant in the case that 
was brought by Paramount Pest Control Service in 
August of 1947, were you not? A. Yes. 

Q. And you were served with a copy of the 
complaint in that [361] case? A. Yes. 

Q. And that charged you, did it not, with vio- 
lating your agreement that you would not go into 
the business for a period of three years after your 
employment ceased? A. Yes. 

Q. And you went right in business with Mr. 
Brewer even after you had been served with that 
complaint, did you not? 

A. I am an employee of Mr. Brewer's. 

Q. Answer the question, please. 

A. I am not in business with Mr. Brewer. 

Q. You went on in the pest control business, 
irrespective of the fact that you were served with 
a copy of the complaint, didn't you? A. Yes. 



vs. Charles P. Brewer, et al. 427 

(Testimony of Raymond Riglitmire.) 

Q. You knew at the time you were going in the 
pest control business that you were serving the same 
accounts in behalf of Mr. Brewer that you had pre- 
viously served in behalf of Paramount Pest Con- 
trol Service? A. Some of them. 

Q. Some of them? A. Yes. 

Q. What percentage? A. I wouldn't know. 

Q. You have a very good idea, haven't you? 

A. I am not a bookkeeper. 

Q. I didn't ask you that. I said you had a pretty 
good idea? 

A. I have no idea of the percentage. 

Q. Many or very few? 

A. I don't understand that question exactly. 

Q. Well, let's go back to the beginning. You 
served customers who wanted their services, services 
of the Paramount Pest Control Service, in connec- 
tion with pests, did you not? 

A. For Paramount? 

Q. Yes, Paramount Pest Control Service? 

A. Yes. 

Q. You knew that they were under contract with 
Paramount Pest Control Service, did you not? 

A. Yes. 

Q. And you made reports upon this service to 
the Paramount Pest Control Service? 

A. Yes. 

Q. Whenever you serviced an account, you wrote 
out a slip saying that you had serviced it on such 
and such a date, for such and such a pest, did you 
not? A. Yes. 



430 Paramount Pest Control Service 

(Testimony of Raymond Right mire.) 

Q. Did Mr. Brewer tell you anything? 

A. Yes. 

Q. What did he tell you? 

A. He told me he was in business for himself. 

Q. Did you make no inquiry about his contract 
or his franchise? 

A. I didn't have any reason to. 

Q. That is not answering my question. Did you? 

A. I didn't make any inquiry. 

Q. You did not? A. No. 

Q. You were willing to just accept the situation, 
and go on, without finding out how Mr. Brewer had 
any right to go on with this pest control business, 
when you were advised by the complaint that was 
filed that he was violating his franchise, is that 
correct ? 

A. I don't understand the question. 

Q. What do you want? Time to think? 

Mr. Bernard : I object to that. 

The Court: Go ahead. 

(Question read.) 

A. Yes. [366] 

Q. (By Mr. Rankin) : You only took a few 
days out of July, 1947, for a vacation, didn't you? 

A. That is right. 

Q. What date did you leave Portland? 

A. I don't remember dates, exactly. 
(Testimony of Raymond Rightmire.) 

Q. The first part or the last part? 

A. The latter part of July, though, sir. 



vs. Charles P. Brewer, et al. 431 

Q. For your vacation? A. Yes. 

Q. What business were you working in before 
you left? A. Before I left for a vacation? 

Q. Yes. 

A. I was working for Paramount Pest Control 
Service. 

Q. And where were you working for Paramount 
Pest Control Service? 

A. I had been working in the Eastern Oregon 
territory 

Q. When did you leave Portland to work on the 
Paramount Pest Control Service in Eastern 
Oregon ? A. Some time the first part of July. 

Q. And where did you go? 

A. Went to Eastern Oregon. 

Q. Whereabouts in Eastern Oregon? 

A. That would The Dalles, Hood River, Pendle- 
ton 

Q. Where did you go after you left there, do 
you remember? 

A. I imagine it was Hood River, up that way. 

Q. Then where did you go ? 

A. From Hood River to The Dalles, Pendleton, 
Heppner, Hermiston, LaGrande, Baker, Union — 
around that territory as the main highway runs. 

Q. Did you go to Boise? A. Yes, sir. 

Q. The record here shows that a cancellation 
came in to Paramount Pest Control Service from 
concerns on your route very shortly after your visit 
to that section. Can 3^011 account for that fact? 

A. I could, in one way. 



432 Paramount Pest Control Service 

(Testimony of Raymond Rightmire.) 

Q. All right; any way that is the truth. 

A. They sent their man into that territory and 
he told patrons of Paramount Pest Control that I 
was not only completely out of pest control but that 
T was in jail and that I was in court, and those 
people out there knew me personally, Mr. Rankin, 
and they knew I was not in jail. 

Q. They saw you, didn't they? 

A. They saw me after the man had told them 
that. That is why they lost customers out there. 

Q. What man told you that ? 

A. The territory generally, in every town that 
was told to me. 

Q. Can you name an instance ? 

A. At the Dairy Co-Operative Association in 
Hood River. 

Q. Who was the Paramount man that they said 
told them that [368] you were in jail? 

A. Mr. Elfers, if I remember right. 

Q. Mr. Elfers? A. Yes. 

Q. When did he see the accounts that you saw? 

A. That I wouldn't know. 

Q. This record will show that in some instances 
there were accounts that you called on, and they 
wanted to know whether you were still with Para- 
mount, Would you think that Mr. Elfers was the 
one who had breached any business ethics if they 
laid the cancellations onto you? 

A. It was through his contact 

Q. What if a customer says that you made the 
statement that they were not competent to carry 
on this business? 



vs. Charles P. Brewer, et al. 433 

(Testimony of Raymond Rightmire.) 

A. I would like to have you get one of those 
customers in here. 

Q. I suppose you would. It is a safe thing to 
say. They did not believe you were in jail when 
they saw you there? 

A. No, but they formed an awfully bad opinion 
of the man that had claimed that I was. 

Q. I should think they would, if he made that 
statement. You went on as far as Boise and you 
also went to Bend, did you not? A. Yes. 

Q. You wish to tell this Court that you didn't 
know all the [369] time you were making this trip 
that Mr. Brewer was going in for himself? 

A. I don't wish to tell the Court that. 

Q. What do you wish to tell the Court about 
your knowledge of whether, when you were serving 
on this trip, you were going to continue to serve 
Paramount Pest Control customers? 

A. Is that a question? I didn't understand. 

(Question read.) 

A. I was serving the customers of Brewer's Pest 
Control then. They had agreed to and wanted my 
services. 

Q. Did you solicit them? 

A. Lots of them, yes. I solicited all potential 
business in every town. 

Mr. Rankin: That is all. 

Mr. Bernard : That is all. 

(Witness excused.) [370] 



434 Paramount Pest Control Service 

EARL MERRIOTT 

was thereupon produced as a witness on behalf of 
defendants and, being first duly sworn, was ex- 
amined and testified as follows: 

Direct Examination 
By Mr. Bernard : 

Q. Mr. Merriott, where do you live, sir? 

A. 706 Southeast Fourteenth Avenue, Portland, 
Oregon. 

Q. How long have you lived in Portland ? 

A. Oh, about twenty- four years. 

Q. When did you go into the pest control 
business ? 

A. I went in in the first part of February, 1947. 

Q. Had you ever been in that business before? 

A. No. 

Q. When you entered their employ, what did 
you do? 

A. I spent about three or four days with Ray 
Rightmire, who was showing me more or less of 
the groundwork on pest control. 

Q. You went around with Mr. Ray Rightmire 
What did Rightmire show you? 

A. Oh, more or less putting out bait for rats. 

Q. How did he tell you to do it? 

A. We used vegetables, fish and meat, whatever 
was called for, and mixed it up in a gallon can or 
container and he showed me the use of the poisons, 
or the amount to put in, and we placed it out at 
what he was telling me was safe places in res- 
taurants or wherever the place was we was servicing. 



vs. Charles P. Brewer, et al. 435 

(Testimony of Earl Merriott.) 

Q. How long did you work w r ith Ray? 

A. About four days. 

Q. Were you at any time furnished with any 
formulas or trade secrets or things of that kind 4 ? 

A. No, sir. 

Q. After working four days and watching Right- 
mire do that work, what did vou do then? 

A. I went strictly on my own. I would be at the 
office at 8 :G0 o 'clock in the morning and either Mr. 
Brewer or Mr. Rightmire would line me out on 
my stops for the day, which I made. 

Q. How long did you continue to work in that 
fashion ? 

A. I worked imtil the last part of July, about 
the 30th or 31st. 

Q. When, if at all, was the first time you knew 
Mr. Brewer had severed or intended to sever his 
connection with Paramount Pest Control Service? 

A. I don't remember the exact date, but it was 
on a Saturday around a little after noon. Mr. Hilts 
and Mr. Brewer and — I don't remember exactly if 
Mr. Duncan was there at that time or not — but it 
was out at Mr. Brewer's home and Charlie told me 
that he was through, that I would be no longer 
working in his employment. 

Q. You say that was the last of July ? 

A. Yes. 

Q. On a Saturday afternoon? [372] 

A. Yes. 

Q. Mr. Hilts was there? A. Yes. 



436 Paramount Pest Control Service 

(Testimony of Earl Merriott.) 

Q. Did you have any information at all, either 
directly or indirectly, from Mr. Brewer on that 
subject prior to that time? A. No. sir. 

<J. Had he ever talked to you about forming his 
own company and you going to work for him? 

A. No, he hadn't. 

Q. There is testimony at some place in this case 
that one of these Paramount Pest Control Service 
men, about that time, asked you if you were going 
to work for Paramount. A. Mr. Hilts. 

Q. Was it at that time? 

A. It was at that time. 

Q. That was the first information you had? 

A. That is right. 

Q. What did you tell him? 

A. I didn't tell him anything. He told me. He 
Bays, "You know that Brewer is breaking from 
Paramount?" And I said, "I had heard something 
but I didn't know what it was all about," and he 
wanted to know if I would continue to work for 
'Paramount and I said, "Well, if Brewer is out, I 
want to make a living and I do like pest control 
and i will work for you." 

Q. Why didn't you go to work for them? [373] 

A. Well, at that time, that particular time, I 
was having car trouble and was working on my car 
at Brewer's home. 

At that time I was working on my car. My car 
had broke down and I was working on it at Brewer's 
home, and I finished the job, oh, late in the after- 
noon. As Mr. Rightmire had been more or less on 



vs. Charles P. Brewer, et ail. 437 

(Testimony of Earl Merriott.) 

the sick list, I dropped out to see him, and that is 

when I heard that he was through with them, that 

they had offered him some agreement, better than 

his position was in the past, and he had turned it 

down. Well, I was more or less curious to find out 

why. 

The only thing he would tell me, he said, "Well, 
they want you to work for a while, but only for a 
while, " and that I probably would not last very 
long. That statement w r as made to him by Mr. Hilts. 

Mr. Rankin: How do you know? 

Q. (By Mr. Bernard) : Mr. Rightmire claimed 
that statement was made by Mr. Hilts? 

A. Mr. Rightmire told me that statement was 
made by Mr. Hilts. 

Q. When did you go to work for Brewer? .. 

A. Oh, I believe it was the following Monday,' 

Q. When did Mr. Brewer contact you about 
going to work for him ? 

A. He didn't. I went over to talk to him, to 
find out. 

Q. You went over there? ' 

A. To find out what the score was and what he 
was going to do. [374] 

Q. What? 

A. I went over and talked to him, to see what 
he was going to do. 

Q. What did he tell you? 

A. He told me that he was going into business 
for himself, and asked me if I wanted to go to 
work for him and I said, "Yes." 






438 Paramount Pest Control Service 

(Testimony of Earl Merriott.) 

Q. That was after this talk with Hilts? 

A. With Hilts. 

Q. Did you at any time enter into any agreement 
or understanding with Brewer or anybody else that 
Brewer was to quit Paramount Pest Control and 
that you boys would take over the business of the 
Paramount Pest Control Service? A. No, sir. 

Q. What relationship did you have to the busi- 
ness 1 Did you have any interest in the business 1 

A. No, sir. I work for a weekly wage. 

Q. What? A. I work for a weekly wage. 

Mr. Bernard : I think that is all. 

Cross-Examination 
By Mr. Rankin: 

Q. You said that you applied whatever poison 
there was for the pest. Did you know the kinds of 
pests? A. Yes. [375] 

Q. Could you analyze what poison was best for 
them? 

A. Not at that time, but Mr. Rightmire showed 
me, 

Q. Did you know what ingredients were in the 
poisons that you used? A. No, sir. 

Q. How did you know what poison was for 
what pest? A. Mr. Brewer told me. 

Q. Mr. Brewer told you? 

A. He supplied me with any poisons I needed. 

Q. You were another one of the defendants in 
the case brought in the Circuit Court, weren 't you ? 

A. Yes, sir. 



vs. Charles P. Brewer, et al. 439 

(Testimony of Earl Merriott.) 

Q. Did you ever know, before that ease was 
brought, about Mr. Brewer's franchise? 

A. No, sir. 

Q. You knew it then? A. I heard of it. 

Q. You saw T it in your complaint, didn't you? 

A. Yes. 

Q. In that complaint in that case? A. Yes. 

Q. You knew about Mr. Rightmire's agreement; 
you knew about Mr. Duncan's agreement from that, 
didn't you? A. Yes. 

Q. Did that make any difference with you about 
going on and [376] serving with these men ? 

A. I was working for a living. 

Q. It did not make any difference with you, then, 
did it? A. No. 

Q. Did you also serve customers of Paramount 
Pest Control Service, whom you knew to be cus- 
tomers of Paramount Pest Control Service, beiore 
August 1st and Brewer's breach or leaving, the 
same customers that he served afterwards or that 
you served afterwards for Brewer? 

A. Would you mind repeating that? 

Q. Yes. Did you serve the same customers for 
Paramount that you later served for Brewer? 

A. Some, yes. 

Q. Did you solicit those customers? 

A. I solicited any potential business. 

Q. Including those that you knew were under 
previous contract with Paramount? A. Yes. 

Mr. Rankin: That is all. 

Mr. Bernard : That is all. 

(Witness excused.) [377] 



440 Paramount Pest Control Service 

ROSALIE BREWER 

oiie of the defendants herein, was thereupon pro- 
duced as a witness and, being first duly sworn, 
was examined and testified as follows : 

Direct Examination 
By Mr. Bernard: 

Q. Mrs. Brewer, you are the wife of C. P. 
Brewer? A. I am. 

Q. You were his wife before coming to Oregon'? 

A. Yes, I was. 

Q. You and he moved to Oregon from Cali- 
fornia"? A. Yes, we did. 

Q. Will you tell the Court what work you did 
with reference to this pest control business for Mr. 
Brewer ? 

The Court: Bo they have any children? Do 
these people have children? 

Q. (By Mr. Bernard) : Do you have any chil- 
dren? A. I have a daughter, yes. 

Q. How old is she? 

A. She is going on fourteen, in June. 

Q. Go ahead. 
, A. I help my husband in the office, post things 
in the books. That only requires sometimes a couple 
of hours, or three days a week, sometimes not that 
much. 

Q. I understand from Mr. Brewer just now that 
the daughter is a daughter of yours by a former 
marriage? [378] A. Yes, she is. 

Q. How long have you and Mr. Brewer been 
married? A. Six years in April. 






vs. Charles P. Brewer, et al. 441 

(Testimony of Rosalie Brewer.) 

Q. Go on with your answer. 

A. I posted things in the hooks for my husband 
because he couldn't. At first, when I worked • at 
the office of Paramount was when my husband was 
manager and the Paramount Pest Control Service 
paid me $35 a month for part-time work in posting 
things in the books, at that office, because they 'fig- 
ured they could not afford to hire a full-time girl. 

Q. That $35 a month, was that paid to you out 
of Mr. Brewer's salary or paid by Paramount! ••?• 

A. By Paramount Pest Control Service. 

Q. That is when he was acting as manager! >•• 

A. That is right, .'-■■. ■;,-.■ 

Q. Go ahead. • ..'■• 

A. And after Mr. Brewer took the franchise, I 
continued to help him because he could not afford 
to hire a girl. I did not spend all my time at the 
office, because I also ran my home. 

Q. Did you do just book work? 

A. Yes, that is all. I am not a bookkeeper. . 

Q. Do you, yourself, have any personal knowl- 
edge as to the circumstances under which Mr. 
Brewer changed from a manager's contract to a 
franchise? 

A. Yes. I w 7 as there when Mr. Sibert offered 
my husband a [379] franchise in our home. 

Q. What was said at that time? That was in 
Portland? A. This was in Portland. 

Q. Go ahead. 

A. It was in the breakfast room of our home. 
My husband called me from the living room and 



442 Paramount Pest Control Service 

(Testimony of Rosalie Brewer.) 
told me what Mr. Sibert had told him and asked 
me, "What do you think, dear?" He said "It 'is 
our money, you know." 

I said, "Well, we haven't much of a choice. We 
are here. We have our home here, and it is entirely 
up to you just what you do." 

Q. Had you heard any of the talk prior to that 
time between Sibert and your husband I 

A. Why, yes. Right after that Mr. Sibert told 
me that within a few years' time my husband would 
be giving me a thousand dollars a month to run my 
home, and I laughed and said, "I would not know 
what to do with a thousand dollars if he gave it 
to me." 

Q. Was that before this franchise contract was 
signed ? A. Yes. 

Q. After that time you continued to do this book 
work, did you? 

A. I helped my husband whenever he needed it, 
yes. 

Q. Do you have any personal knowledge of what 
took place in March when they had some dispute 
over whether it was to be [380] divided on a 50-50 
basis or not? 

A. The only knowledge I had was when my 
husband turned to me 

Q. Just a minute. Was anybody there at the 
time ? 

A. Mr. Hilts and my husband and I were in the 
office when Mr. Hilts asked for franchise money 



vs. Charles P. Brewer, et al. 443 

(Testimony of Rosalie Brewer.) 
and my husband turned to me and asked me to 
make out a. check. I hesitated and got red in the 
face. He yelled at me, which he doesn't usually do, 
and told me to make it out. 

Q. That was the check that was drawn in. 
March'? A. That is right. 

Q. You say your husband yelled at you. What 
did he say? 

A. My husband does not usually speak very 
harshly to me. 

The Court: You are lucky. Hardly any other 
woman can say that. 

A. Maybe not, but I can. 

Mr. Bernard : Well, go ahead. 

A. He told me to make out that check in a 
certain tone of voice that he does not usually use. 

Q. What did he say to Mr. Hilts? 

A. Nothing at that time, except that he handed 
him the check. 

Q. Were you with him when he talked to him? 

A. No, sir, I wasn't. 

Q. There is in evidence here a copy of a letter 
dated March 15th from Hilts to your husband. You 
are familiar with that letter, are you? [381] 

A. I signed for it. 

Q. When did that letter come to your home? 

A. On a Sunday morning. 

Q. Was it a special delivery letter? ; 

A. Yes. 

Q. Sent by airmail? A. Yes. 



444 Paramount Pest Control Service 

(Testimony of Rosalie Brewer.) 

Q. And you signed for it? A. Yes, I did. 

Q. Did you go down to Oakland with your hus- 
band in the latter part of June? 

A. No, I didn't. I was in California, visiting 
my sister. 

Q. Did your husband meet you there? 

A, Yes, he did. 

Q. About what date? 

A, Around the last part of June. 

Q. Did you go to Oakland with your husband, 
then? A. Yes. 

($T When did you get in Oakland? 

A. We came from Cupertino, California, Mon- 
day morning to Oakland to the Paramount office. 

Q. Did you see Mr. Sibert? 

A. Not at the office. Mr. Fisher took us to the 
home. 

Q. Mr. Fisher took you to Mr. Sibert 's home? 

A. Yes. [382] 

Q,' Tell the Court about what the conversation 
was, generally, in Mr. Sibert 's home? 

: A. Well, they were friendly when we came in. 
That afternoon he told me that I didn't need to 
work myself and I asked why. I didn't understand 
it. I said, "I don't understand what you mean at 
all,*' and he said, "Well, Charlie can afford to hire 
a girl now." 

I said, "Well, I don't see where he can, where I 
have been doing that," and I said, "I don't see why 
he has to get a girl at $150 a month when it just 



vs. Charles P. Brewer, et al. 445 

(Testimony of Rosalie Brewer.) 
takes me a short while to do that work, arid I could 
use it myself/' and he said, "Rosalie, Charles has 
made $10,000 in this last year," and I said, "X 
haven't seen a cent of it," 

Q. What happened then? 

A. I felt very had about it, enough so X was mad 
about it. 

Q. You knew about what he was making ? 

A. Yes, I did. 

Q. Where did you go then ? 

A. Well, we had dinner there and then, later on 
in the evening, X went upstairs and X cried. 

Q. With reference to that time, when did you 
return to Portland? 

A. We came back to Portland the following day. 

Q. By plane? A. By plane. [383] 

Q. Were you informed then by anybody that 
there was any proposed change ? 

A. My husband did start to discuss it with me 
on the plane but I got ill, and then we talked about 
it after we got home. 

Q. Well, what did he tell you? 

A. He told me they wanted him to go back on 
the 20-80. 

Q. Who wanted him to go back on the 20-80 
plan? 

A. Mr. Sibert wanted him to go back. .... 

Q. Did your husband seem agreeable to that? 

A. No, sir. 

Mr. Bernard : I think you may cross-examine.. 



446 Pa ra mount Pest Control Service 

(Testimony of Rosalie Brewer.) 

Cross-Examination 

By Mr. Rankin: 

Q. Did you know about the 20-80 plan, Mrs. 
Brewer ? 

A. Yes. My husband and I had talked about it, 
yes. 

Q. When did you first learn about the 20-80 
plan*? 

A. When he first took the franchise % 

Q. July 1, 1 947 ? A. That is right. 

Q. Did you know of the 20-80 plan before that? 

A. No. 

Q. Your husband had never discussed whether 
or not he wanted to go under the franchise*? 

A. No, sir. 

Q. Did he tell you when he had signed the 20-80 
franchise'? [384] A. I beg your pardon. 

Q. Did he tell you when he had signed the 20-80 
franchise ? 

A. He told me when he signed it, yes. I mean 
he signed it, yes, but I don't know the exact date. 
I wasn't with him. 

Q. Some time in July, 1947? 

A. Some time in July, yes. 

<J. He subscribes that there was a change made 
in that 20-80 franchise some time after it was 
signed. Do you know when that change was made*? 

A, My husband and I went to Oakland in No- 
vember. He was telling me that he could not go 
any longer on that 20-80 basis, that we were not 



vs. Charles P. Brewer, et al. 447 

(Testimony of Rosalie Brewer.) 
making any money, and that we had used all of 
our savings to live on that we had, and that was the 
reason we went to Oakland in November. 

Q. Had you then determined not to go on with 
the franchise if you could not get a modification 
of it? 

A. I am sorry. I didn't have anything to do with 
that myself. 

Q. Did your husband 

A. I didn't think so much about it. He only 
discussed it with me. 

Q. Your husband discussed it with you, did you? 

A. He did talk about it, yes. 

Q. Did he tell you whether or not he was going 
on with the franchise if he could not get a modifi- 
cation? 

A. He didn't say anything about that one way 
or the other. [385] 

Q. One way or the other? 

A. No, sir, not to me. 

Q. Your November conference was very satis- 
factory, was it not? 

A. Yes, they were very cordial. In fact, the only 
conversation that I heard about was in the Athletic 
Club when Mr. Fisher came in — we had not seen 
him yet — and he shook hands around and said, 
" Hello." Ted Sibert said, " Charlie has agreed," 
and told him about it, and all I remember is that 
Mr. Fisher said, "Well, we can do that with Char- 
lie, but we couldn't with Ossie in Seattle." 



448 Paramount Pest Control Service 

(Testimony of Rosalie Brewer.) 

Q. How long was the 50-50 agreement, as you 
described it, to last? 

A. Well, what my husband told me, it was to 
last from then on. 

Q. You did not hear any conversation with any 
of the Paramount people at all ? 

A. No, I didn't, 

Q. Did anyone tell you any different, at any 
time subsequently'? A. What do you mean? 

Q. Did anyone from Paramount tell you any- 
thing different ? A. No, not me, no. 

Q. You have testified that you were red in the 
face, I believe. A. I was. 

Mr. Rankin : May I see the exhibits, please, and 
particularly [386] the check, the February check? 

Q. This check that I hand to you is dated Feb- 
ruary 6, 1947. Is that your signature attached 
to it? A. That is my signature? 

Q. Yes; is that your signature attached to it? 

A. That is my signature, yes. 

Q. Were they asking you for money at the time 
you signed this check? 

A. My husband asked me to make the check. 
That is all I know about it. 

Q. You don't know whether they were asking 
you for money or not % 

A. No, I don't. I wasn't at the office very often. 

Q. How did you happen to select the $250. 

A. He told me to make it out for that amount 
and that is what I did. He ran the business. I 
didn't. 



vs. Charles P. Brewer, ei at. 449 

(Testimony of Rosalie Brewer.) 

Q. Did you tell Mr. Hilts at that time you wished 
it were was more? A. I don't recall. 

Q. Were relations friendly at the time between 
mid Paramount Pest Control Service, at the time 
that check was drawn? 

A. I believe so. 

Q. As a matter of fact, they continued friendly 
dow T n to the 24th of July, didn't they'? 

A. The 24th of July? 

Q. Yes. [387] 

A. Yes, we were always friendly. 

Q. They weren't friendly after Mr. Brewer ter- 
minated his agreement? 

A. No, they hav